Upload
saravanan
View
356
Download
23
Embed Size (px)
DESCRIPTION
Details about CGTMSE
Citation preview
Credit Guarantee Fund Trust forCredit Guarantee Fund Trust for
Micro and Small Entreprises
(CGTMSE)
Presentation on Credit Guarantee Scheme
MSE as defined in MSMED Act 2006
Micro and Small Enterprises (MSE) in India
MSE is governed by the MSMED Act 2006
More than 26 million units Registered / Unregistered MSEs
Provide employment to more than 60 Million persons
Largest employment generating sector after agriculture
Employment potential at low capital cost
Constitute 95% of industrial units
Key contributors to national economy
45% of manufacturing output
40% of total exports
8% of Gross Domestic Product
Products of MSEs
Chemical &
Chemical
Products
22%
Basic Metal
Industry
12%
Metal Products
More than 6000 products
Food products
36%
Metal Products
10%
Electrical &
Machinery
Parts
8%Rubber &
Plastics
Products
6%
Others
6%
CGTMSE Establishment & Corpus
EstablishmentEstablishment
Set up as a Trust in August 2000
Administered by a Board of Trustees (BoT)
Settlors of Trust
Settlors of Trust
Govt. of India (GoI) & Small Industries Development Bank of India (SIDBI)
Contribution ratio is 4:1
CorpusCorpus
Initial Corpus Rs.125 crore
Present Corpus Rs.2,156.56 crore
Committed Corpus Rs.2500 crore
Objectives of CGTMSE
Shift from collateral to merit based lending
Act as catalyst of entrepreneurship promotion
Facilitate institutional credit flow to MSE sectorFacilitate institutional credit flow to MSE sector
Address growth constraints of MSE sector
Enable financial inclusion / employment generation
Revive confidence in credit guarantee mechanism
Micro & Small Enterprises as per MSMED Act eligible
Both Manufacturing and Service sectors covered
Credit Facility up to Rs.100 lakh covered
Credit Guarantee Scheme (CGS)Salient Feature
All fund / non-fund based facility covered
Maximum Cover of up to 85% of credit facility
All credit facility must be extended without any collateral security
Credit for retail trade, educational / training institutions and SHGs are not eligible for coverage.
Borrower Category
Maximum Guarantee Cover, where Credit facility is
Upto Rs.5lakhAbove
Rs.5lakh to Rs.50lakh
Above Rs.50lakh to Rs.100lakh
Micro Enterprises85% of the amount in default /
75% of amount in default /
Rs.37.50lakh plus 50%of amount in defaultabove Rs.50lakh /
Extent of Guarantee cover
Micro Enterprises in default / Rs.4.25lakh
default / Rs.37.5lakh
above Rs.50lakh /Rs.62.50lakh
Women Entrepreneur / units located in North Eastern Region (Incl. Sikkim)
80% of amount in Default / Rs.40 lakh
Rs.40lakh plus 50% ofamount in defaultabove Rs.50lakh /Rs.65lakh
All other category of borrowers
75% of amount in Default / Rs.37.5lakh
Rs.37.50lakh plus 50%of amount in defaultabove Rs.50lakh /Rs.62.50lakh
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Tenure of Cover
Tenure of Guarantee Cover for Term Credit, Combined WorkingCapital & Term Credit and Composite Credit is tenure of TermCredit / Composite Credit or loan termination date, whicheveris earlier
Where Working Capital facility alone is covered, the tenure is Where Working Capital facility alone is covered, the tenure isfor a block of five years or loan termination date, whichever isearlier. Thereafter, MLI should apply for renewal of GuaranteeCover
If tenure of Term Loan is 3 years, tenure of working capital willalso be 3 years. After 3 years, if guarantee cover is to becontinued for working capital, application for renewal to belodged online
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Application Lodgment
For credit facility sanctioned in a particular quarter, application forGuarantee Cover should be lodged by the end of the next quarter
In case of Working Capital Credit, date of renewal / review /enhancement can be taken as date of sanction
In case of credit facility secured by collateral, application can be In case of credit facility secured by collateral, application can belodged after release of collateral, subject to time limits specified forapplication lodgment
Account should not have become overdue / bad / doubtful ofrecovery / adjusted for debts deemed bad or doubtful of recovery ason date of application / payment of guarantee fee
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Guarantee Fee
On approval of Guarantee Cover, Demand Advice for Guarantee Fee
and is to be paid upfront for commencement of Guarantee Cover
In enhancement cases, Guarantee Fee is calculated on pro-rata basis
for residual tenure of guaranteefor residual tenure of guarantee
In case of working capital, payment is to be made within one month
from Demand Advice date and in case of term credit, one month
from date of first disbursement / demand advice date, whichever is
later
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Annual Service Fee
Annual Service Fee (ASF) is to be paid for all accounts for which
Guarantee Cover has been availed / is in force in a financial year, at
the beginning of the next financial year i.e., ASF is collected in
arrears and is calculated pro-rata for the first and last years.
If payment is not received within stipulated period, Guarantee Cover
lapses and account is liable to be closed. Annual Service Fee is to be
paid till disbursement of first installment of claim
Present Service Fee rate is 0.50% of credit facility sanctioned for
loans upto Rs.5 lakh and 0.75% of credit facility sanctioned for loans
above Rs.5 lakh
Facilitating Collateral-free Credit to Micro & Small Enterprises
Cost of Cover
Credit Facility
Upfront Guarantee FeeAnnual Service
Fee North East
Region(incl. Sikkim)
Others
Upto Rs.5 lakh 0.75% 1.00% 0.50%Upto Rs.5 lakh 0.75% 1.00% 0.50%
Above Rs.5 lakh & upto Rs.50 lakh 0.75% 1.50% 0.75%
Above Rs.50 lakh & upto Rs.100 lakh 1.50% 1.50% 0.75%
Facilitating Collateral-free Credit to Micro & Small Enterprises
MLI is at their discretion may pass on the cost of Guarantee cover to the borrowers.However, responsibility of payment of Guarantee / Service Fee to the Trust will be on MLIs
CGS Handicraft Artisans
Guarantee Fee / Annual Service Fee in respect of credit facilitiessanctioned to artisans in the handicrafts sector and covered underthe Credit Guarantee Scheme are reimbursable by Office of DC(Handicrafts)
Disbursement date / amount to be indicated while entering the Disbursement date / amount to be indicated while entering thedetails to enable system to appropriate the fee
Guarantee Fee for eligible cases from April 01, 2009 is beingappropriated out of the fund.
For earlier cases, MLIs may inform in writing to enableappropriation of Annual Service Fee out of the fund.
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Govt. Sponsored Schemes
Government of India has been coming up with new and innovativeideas for the upliftment of the under privileged and theunemployed by bringing sponsership schemes.
PMEGP is one of such schemes which was formed by merger of twoschemes namely PMRY (Prime Ministers Rojgar Yojana) & REGPschemes namely PMRY (Prime Ministers Rojgar Yojana) & REGP(Rural Employement Generation Program)
The Scheme will be implemented by Khadi and Village IndustriesCommission (KVIC) under the administrative control of theMinistry of MSME at the National level.
Loan upto a limit of Rs.25Lakh for manufacturing sector and uptoRs.10Lakh for service sector can be sanctioned by banks and thesame can be covered under CGTMSE.
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Lodging of claims
Pre-requisites for lodging claims are
Guarantee Cover is in force
Account classified as NPA & reported to CGTMSE
Recall Notice issued Recall Notice issued
Lock-in period expired
Recovery proceedings initiated
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Lodging of claims
Guarantee Cover is in Force
Guarantee Cover in respect of the facility was in force at the time ofaccount turning NPA and there are no arrears in payment of ASF.
Account classified as NPA & reported to CGTMSE
Account should be classified as NPA and the status updated toCGTMSE by the end of the next quarter.
Lock-in Period
18 months from guarantee start date or last date of disbursement,which ever is later.
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Lodging of claims
Recovery proceedings initiated
Suit for recovery of primary security should be filed with LokAdalat / RRA / Civil Court / DRT / SARFAESI Act
If recovery proceedings are initiated under SARFAESI Act, actionas per Section 13(4) of the Act, has to be takenas per Section 13(4) of the Act, has to be taken
Backended Subsidy, if any, should be indicated
Declaration and Undertaking is to be signed by an officer notbelow the rank of Assistant General Manager
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Lodging of claims Important*
Accounts classified as Non-Performing Asset (NPA) in a particular
calendar quarter, to be reported to the Trust by end of subsequent
quarter
Claim to be lodged within a maximum period of one year from date
of NPA, if NPA is after lock-in period or within one year of expiry of
lock-in period, if NPA is within lock-in period
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Claim Settlement
Two stage claim settlement process
First installment of 75% of guaranteed portion of Amount in Defaultwill be paid within 30 days of receipt of complete information
Interest at prevailing Bank Rate will be paid in case of delay beyond Interest at prevailing Bank Rate will be paid in case of delay beyond30 days
Second installment shall be paid on conclusion of recoveryproceedings
On conclusion of recovery proceedings, final loss is shared byCGTMSE and MLI, in the ratio ranging from 85 : 15 to 62.5 : 37.5, asthe case may be
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Claim Settlement
Amount in Default - Outstanding in the account, both principal &interest, as on date of NPA or the date of lodgment of the claimapplication, whichever is lower, subject to maximum of amountguaranteed
Recoveries made after NPA date / payment of first installment ofclaim should be remitted to CGTMSE after deducting legalclaim should be remitted to CGTMSE after deducting legalexpenses, if any
MLIs may use OTS / Compromise settlement route for recovery.CGTMSE has to be informed if such settlement is negotiated
Facilitating Collateral-free Credit to Micro & Small Enterprises
Common discrepancies
Non-lodgment of claim online
Legal proceedings not initiated / action as per section 13(4) notinitiated in SARFAESI cases
Repayment / Outstanding details not fed properly
Outstanding mentioned as on date of NPA considerably higher than Outstanding mentioned as on date of NPA considerably higher thanthe sanctioned amount
Value of security as on date of NPA / lodgment of claim notmentioned
Non-indication of date of issue of recall notice after NPA
Declaration & Undertaking not enclosed / not signed by appropriateauthority
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Claim Settlement
Amount in Default on NPA Date Rs.8lakh
CGTMSEs Liability (75%) Rs.6lakh
First installment paid by CGTMSE (75% of liability) Rs.4.5lakh
Recovery from Primary Security remitted to CGTMSE,
Scenario
Recovery from Primary Security remitted to CGTMSE,after adjusting legal expenses Rs.1lakh
Net Amount in Default (Final Loss) Rs.7lakh
Second installment payable by CGTMSE
(Rs.5.25lakh minus Rs.4.50lakh)Rs.75,000
Final payout to MLI (Recovery from Primary Securityremitted + 2nd Installment) Rs.1.75lakh
Facilitating Collateral-free Credit to Micro & Small Enterprises
CGS Benefits
Credit Guarantee Scheme - A tool for
Widening of credit portfolio
Better management of risk Better management of risk
Faster recovery of dues
Enhancement of profitability
Facilitating Collateral-free Credit to Micro & Small Enterprises
Role of Credit Guarantee
A weak project cannot be turned into a viable one with guarantee
cover and is only an additional comfort to the lender, as is collateral
security
Banks should evaluate credit applications by using prudent
banking judgment / due diligence / business discretion in
supporting only viable projects under the Credit Guarantee
Scheme and conduct the account(s) of the borrowers with normal
banking prudence
Facilitating Collateral-free Credit to Micro & Small Enterprises
Guarantee Approval and Amount As on March 31, 2011
254000
12589
200000
250000
300000
GA
10000
12000
14000
A
m
27457 30285
53708
150034
7051056
2199
6875
0
50000
100000
150000
F Y 01 -06 F Y 07 F Y 08 F Y 09 F Y 10 F Y 11
Yea rs
G
u
a
r
a
n
t
e
e
A
p
p
r
o
v
e
d
0
2000
4000
6000
8000m
l
o
u
n
t
G urantee
Approved
Amount(R s . C rore)
Facilitating Collateral-free Credit to Micro & Small Enterprises
RBI Working GroupMajor recommendations
Limit for collateral free loan be raised to Rs.10 lakh
Composite Guarantee Fee of 1% p.a.
Restoration of Income Tax exemption
Guarantee Cover upto 85% of amount in default to Micro Enterprises Guarantee Cover upto 85% of amount in default to Micro Enterprises
for loans upto Rs.10 lakh
Legal proceedings as pre-condition for invoking guarantee be waived
for credit facilities upto Rs.50,000/-
Claim lodgment period be increased to two years
Final claim to be paid after three years of obtention of decree of
recovery
Facilitating Collateral-free Credit to Micro & Small Enterprises
We welcome suggestions, advice andother inputs to improve our services
Contact us at :Credit Guarantee Fund Trust for Micro and
Small Enterprises7th Floor, MSME Development Centre7th Floor, MSME Development Centre
Plot No.C-11, G BlockBandra Kurla Complex
Mumbai-400051Phone : 022-26541803-07, 61437800 (24 lines)
Fax : 022-26541821E-mail: [email protected] : www.cgtmse.in