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CGTMSE
(HOBC No. 113/184 DT. 08/01/2020)
(HOBC No. 116/085 DT. 27/06/2022)

Presented by,
Abinash Kr. Mandilwar
Vice Principal, BOI STC, Kolkata
 INTRODUCTION OF CGTMSE
Government of India and SIDBI jointly set up Credit Guarantee Fund Trust for Small
Industries (CGTSI) in 2000.
The GOI and SIDBI as settlors of the Trust have committed a corpus of ₹ 2,500 crore in
the ratio of 4:1 to the CGTMSE, out of which ₹ 1,906 crore has been contributed to date.
Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) w.e.f. 2nd July
2007.
Bank has three major benefits in CGTMSE coverage loan account.
1. ‘Zero’ risk weight for guarantee cover available.
2. NPA Accounts, no provisioning for cover portion.
3. In the NPA account claim settlement to the extent of 75% of the eligible amount is
Immediate within 30 days.
 AMENDMENTS IN CGTMSE
SCHEME 2018
The major amendments in the Scheme are as under:-
a) Expanding the Coverage of the Credit Guarantee Scheme (CGS)
to cover the MSE Retail Traders segment.
b) Charging Annual Guarantee Fees (AGF) on outstanding loan
amount rather than the sanctioned amount.
c) Allowing Loans with partial collateral security under Credit
Guarantee Scheme.
d) Increase in the extent of guarantee coverage to 75% from the
existing 50% for proposals above ₹ 50 Lakhs.
 MODIFICATION IN CGTMSE IN
APRIL 2023
CGTMSE has recently brought out following
modifications in the existing guarantee scheme as
below:
1. Increase in ceiling of coverage from ₹ 2 Cr. To ₹ 5 Cr.
2. Reduction in Annual Guarantee Fee (AGF).
3. Increase in the threshold for waiver of Legal Action
to ₹ 10 Lakhs & option for claim settlement in single
instalment.
 ELIGIBILITY CRITERIA
All MSE Loan sanctioned limit up to ₹ 500 lakh applicable all guarantees
approved on or after April 01, 2023.
Account should be Standard & Regular (not reported SMA as per RBI
Norms) as on application date.
Loans under Consortium are not eligible under the scheme.
Loans to SHGs are not eligible under the scheme.
FITL accounts & partial conversion of WC to WCTL accounts are NOT
ELIGIBLE.
Producer Organization (PO) & FPO are ELIGIBLE if credit facilities are not
for core agricultural activities.
Wholesale Trade & Educational Institution ELIGIBLE to be covered under
the scheme.
Both Term Loan and Working Capital are covered.
Both Fund Based & Non-Fund Based covered.
 ROI, GUARANTEE &
COLLATERAL SECURITY
For loans up to ₹ 10 Lakh, no collateral security or third party guarantee
should be obtained, to be eligible under the scheme.
For loans above ₹ 10 Lakh, no third party guarantee is allowed but partial
collateral security may be obtained. The details of the same have been explained in
circular, under the Hybrid model of the scheme.
From 31.10.2018, CGTMSE has removed the rate of interest limit cap of 14% for all
eligible loan accounts.
All existing and new MSE Accounts covered under CGTMSE and without any
collateral security with a limit of up to ₹ 100 lakhs will be eligible for 0.5% interest
concession.
 Lock-in period is 18 months from the date of the last disbursement of the loan or
the date of payment of the guarantee fee whichever is later.
 LOAN SANCTION LIMIT
A borrower can be given the benefit of coverage only once in his/her lifetime
under CGTMSE cap of ₹ 500 lakh is removed by 06 December 2019 notification.
Now the borrowers can avail of incremental credit facilities (i.e. to the extent of
reduction in the outstanding exposure limit) under Credit Guarantee Scheme of
CGTMSE, subject to a maximum cap of ₹ 500 lakh.
In case an account which had been sanctioned earlier had been omitted
to be covered under the scheme, only Working Capital accounts of such
borrower can be covered at the time of review/renewal of accounts.
Where the borrower is enjoying several distinct credit facilities, one or
more out of the same can be covered up to the Eligible Amount (presently ₹
500 Lakhs).
Allowing guarantee coverage anytime during the tenure of Loan, provided the
credit facility was not restructured/remained in SMA2 status in the last 1 year
from the date of submission of application.
If additional credit facilities are sanctioned, Fresh applications have to be
submitted for an additional limit.
 APPLICATION FOR
GUARANTEE COVER
Application for Guarantee cover lodged online through
Zonal Office designated as Nodal Offices.
The Bank is required to pay the guarantee fee within 30
days from the date of first disbursement of the credit
facility (Not Applicable for Working Capital) or 30 days
from the date of Demand advice (CGDAN) of guarantee
fee whichever is later or such date as specified by the
CGTMSE.
Other Charges such as interest in a term loan, Penal
Interest, Commitment Charge, Service charge or any other
expenses shall not qualify for guarantee cover.
 GUARANTEE COVER LIMITATION
The Guarantee Cover shall run through the entire agreed tenure of
the Term Credit in case Term Loan, sanctioned alone for the defaulted
principal amount.
The guarantee cover for Cash Credit alone will be renewed thereafter
for a block of 5 years each, from the original cover start date for
outstanding (inclusive of interest) or on the date of submission of claim
whichever is less.
CGTMSE has decided to remove the tenure cap of 10 years for
coverage of working capital facilities under the Credit Guarantee
Scheme from March 18, 2020.
 EXTENT OF GUARANTEE COVER
AVAILABLE W.E.F. 01/04/2023
Category Up to ₹ 5.00 More than ₹ More than ₹ 50.00 lakh
lakh 5.00 lakh to ₹ to ₹ 500.00 lakh
50.00 lakh
Micro Enterprises 85% of amount 75% of amount 75% of amount default
default amount default amount amount Max. ₹ 375.00 Lakh
Max. ₹ 4.25 Max. ₹ 37.50
Lakh Lakh
MSE Located in UT of J&K/ UT of 80% of amount default amount 75% of amount default
Ladakh/ NE Region Max. ₹ 40. Lakh amount Max. ₹ 375.00 Lakh
Women/SC/ST/PwD/MSE 85% of amount default amount Max. ₹ 425.00 Lakh
promoted by Agniveers/ MSE
situated in Aspirational District/
ZED Certified MSEs
All others 75% of amount default amount Max. ₹ 375.00 Lakh
 GUARANTEE FEE (WEF APRIL 01, 2023)
In pursuit of revamp of Credit Guarantee Scheme to increase flow of credit to MSEs, it has
been decided to bring down the cost of guarantee. Further, guarantee fees to Retail /
Wholesale Trade is made at par with other activities. The revised the Annual Guarantee Fee
(AGF) structure under Credit Guarantee Scheme (CGS -I) applicable to all the guarantees
approved/ renewed on or after April 01, 2023 is given in the table below.
Standard Rate with Risk
Slab Standard Rate (%pa)* Premium (%pa)*

0-10 lakh 0.37 0.63

Above 10-50 lakh 0.55 0.94
Above 50-1 crore 0.60 1.02
Above 1-2 crore 1.20 2.04
Above 2-5 crore 1.35 2.30
*Above 2-5 Crore 1.35 AGF will be charged on the guaranteed amount for the first year
and on the outstanding amount for the remaining tenure of the credit facility.
 FEE SHARE IN BOI
Limit Fee Share
With effect from 01/01/2013

Limit up to ₹ 50 lakh. 1st year 100% shared by bank, from next

year borrower has to pay.
Limit above ₹ 50 lakh to ₹ 1st year 50% shared by bank, from next
100 lakh. year borrower has to pay.
Limit above ₹ 100 lakh Fully born by the borrower.

PMEGP/ Women/ SC/ST/ 100% shared by bank for entire period.

Minority/ Unit in NER/ J&K
up to ₹ 100 lakh.
 DELEGATION OF SANCTION
(HOBC No. 116/085 DT. 27/06/2022)
1. No collateral should be accepted in case of loans up to ₹ 10 lakh extended to units in
the MSE sectors Sanctioning authority should cover all loans up to ₹ 10 lakh
extended to Micro & Small Enterprises and are eligible for coverage under guarantee
scheme of CGTMSE or other approved institutions such as CGFMU without any
exception.
2. Sanctioning authority may consider proposals with CCR 60% & above for all
accounts which are above ₹ 10 lakh and otherwise eligible under CGTMSE, without
obtaining CGTMSE coverage.
3. Proposals under Hybrid Security Product (irrespective of level of CCR) may be
considered by sanctioning authority.
4. For Proposals above ₹ 10 lakh and proposed to be covered only under CGTMSE, the
delegation rests with the Sanctioning Authority (No prior clearance required).
5. In case of borrowers are not inclined to take CGTMSE coverage and No Collateral or
CCR is less than 60% then delegated authority to approve waiver of CGTMSE cover
will be vested with ZLCC onwards.
 TAKE OVER OF ACCOUNTS
COVERED UNDER CGTMSE
a) Takeover of accounts from other Banks, already covered under CGTMSE is allowed
under CGTMSE Hybrid Model only as a fresh sanction and guarantee coverage will be
available only for maximum cap of ₹ 200 Lakhs per borrower.
b) No accounts are permitted for takeover, if it is proposed to be covered under
CGTMSE only.

Restructurinq of CGTMSE accounts — Intimation to CGTMSE:

In case of any Restructuring/Rephasement/Modification in original terms of sanction,
the same is to be reported to CGTMSE. Non-reporting may lead to the termination of
CGTMSE guarantee cover.
 CGTMSE MODULE IN FINACLE
A new menu CGTMSE has been developed in Finacle.
CGTMSE menu is available for standard loan & CC A/c only.
Accounts required to modify ACM-V(MIS Code) for CGTMSE
Guarantee Cover Code as ‘7’.
Application Entry: A- Application Detail:- Branch has to enter &
verify the application data. ZO/HO official will update the
application online by his user id and print the report by web
portal of CGTMSE.
Updation of CGPAN: U- Updation of CGPAN:- After getting
CGPAN from GTMSE, ZO advice the branch and branch update
guarantee start date, Expiry date through U.
 CGTMSE MODULE IN FINACLE
NPA Reporting: N- NPA Reporting:- If an account slipped to NPA,
Branch has to report through option N. ZO will generate the
report and update on CGTMSE website. Branch has to report
on or before last day of Next Quarter.
Submission of Claim: C- Claim:- Branch has to report the claim
through ZO by using C-Claim. Before claiming the credit
facility has been recalled and the recovery proceeding have
been initiated under due process of law. Mere issuance of
recall notice under SARFAESI Act cannot be construed as
initiation of legal proceedings for purpose of preferment of
claim under CGS. Lending institution should take further
action as contained in Section 13 (4) of the above Act.
 CGTMSE GUARANTEE INVOKATION PERIOD
Guarantee of CGTMSE in respect of accounts covered under CGTMSE may be
invoked if the following conditions are satisfied -
a) 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
for accounts sanctioned before 01.01.2013.
b) The Branch/Bank can invoke the guarantee in respect of credit facility within a
maximum period of two years from date of NPA, if NPA is after lock-in period
or within two years of expiry of lock-in period, if NPA is within lock-in period, for
accounts sanctioned on or after 01.01.2013 but turned NPA before 15.03.2018.
c) The Branch /Bank can invoke the guarantee in respect of credit facility within a
maximum period of three Years from the date of NPA, if NPA is after lock in
period or within three years of expiry of lock in period, if NPA is within lock in
period for accounts turned NPA on or after 15.03.2018, irrespective of sanction
date.
 WAIVER OF LEGAL ACTION IN NPA ACCOUNTS
For the purpose of the scheme, the issue of notice under Lok Adalat is sufficient to prove that legal
proceedings have been initiated for the cases where the total default is up to ₹ 20 lakhs only.
Waiver of Legal action in respect of smaller loans: CGTMSE has waived the pre-condition of initiation of
legal proceedings for invoking of guarantees where the aggregate outstanding amount considered eligible
for claim settlement by CGTMSE does not exceed ₹ 5 lakh for those claims lodged on or after 02.01.2023.
Now, CGTMSE has revised the threshold for waiver of legal action to ₹ 10 lakh per claim for claim lodged
on or after 01.04.2023
In all such cases, where the filing of legal proceedings is waived, a committee headed by an officer, not
below the rank of Assistant General Manager of MLI should examine all such accounts and take a decision
for not initiating legal action and filing claim under the Scheme. The report of such a committee may be
submitted along with the claim application.
Further, CGTMSE has decided to offer MLIs two options for claim settlement at the time of claim
lodgement for cases where waiver of legal action is applicable.
Option-1: Single instalment of claim settlement with reduced extent of guarantee by 15%. Eg: in respect
of extent of coverage of 75%, reduced coverage would be 60%, 80% would be 65% likewise.
Option-2: Existing claim settlement process in two instalment i.e. 75% 1st instalment and 25% after 3
years as 2nd instalment.
 CGTMSE MODULE IN FINACLE
Settlement of Claim: S- Settlement:- Settlement of claim is to be entered and
verified by this menu. The CGTMSE shall pay 75% of guaranteed amount within 30
days.
The balance 25% will be paid on conclusion of recovery proceeding or after 3 years
from decree of recovery, whichever is earlier. Any amount realized from sale of
security should be remitted in full to the corporation after deducting our expenses
etc.
Upgradation: UG- Upgradation:- Upgradation of account reported through this
menu.
Restructured: RS- Restructured:- Restructured of account reported through this
menu.
Reporting of closed A/C: CL- Reporting of closed A/c
Available Reports: MISRPT=> CGTMSE
The consolidated reports can be generated to monitor CGTMSE portfolio in
HO/ZO/BRANCH level.