The Scheme shall be known as the Credit Guarantee Fund Scheme 2022 for Micro and Small Enterprises (CGS-I) [earlier known as Credit Guarantee Fund Scheme for Small Industries (CGFSI)].CGT SME scheme
Subsequent to the enactment of MSMED Act-2006,
the Trust was rename as Credit Guarantee Fund Trust for Micro and Small Enterprises
and scheme as Credit Guarantee Fund Scheme for Micro and Small Enterprises. CGTSME scheme
“Amount in Default” means the principal and interest amount outstanding in the account(s) of
the borrower in respect of term loan and amount of outstanding working capital facilities (including interest),
as on the date of the account becoming NPA, or the date of lodgement of claim application
whichever is lower or such other date as may be specified by
CGTMSE for preferring any claim against the guarantee cover subject to a maximum of amount guaranteed.
- “Collateral security” means the security provided in addition to the primary security, in connection with the credit facility extended by a lending institution to a borrower.
- “Credit facility” means any financial assistance by way of term loan and / or fund based and non-fund based working capital(e.g. 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 Guarantee Fee, the credit facility extend shall mean the credit facilities
(both fund and non-fund based) cover under CGS-I and for which guarantee fee has been paid, as at March 31, of the relevant year.
(iv) “Eligible borrower” means new or existing Micro and Small Enterprises to which credit facility has been provided by
the lending institution without any collateral security and/or third party guarantees.
However, a “Hybrid / Partial Collateral Security” product allowing guarantee cover on credit facilities having collateral security, for the portion of credit facility not cover by collateral security (unsecured portion), has also introduced by CGTMSE.
In the partial collateral security model, the MLIs will allowed to obtain collateral security for a part of the credit facility,
whereas the remaining part of the credit facility, can cover under Credit Guarantee Scheme of CGTMSE.
(v) ‘Guarantee Cover’ means maximum cover available per eligible borrower of the amount in default in respect of the credit facility extended by the lending institution
(vi) “Lending institution(s)” means a commercial bank for the time being
includ in the second Schedule to the Reserve Bank of India Act, 1934, Regional Rural Banks,
NBFCs and Small Finance Banks as may be specified by the Trust from time to time, or any other institution(s) as may be direct by the Govt. of India from time to time. The Trust may, on review of performance, remove any of the lending institution from the list of eligible institution.
(vii) “Material date” means the date on which the annual guarantee fee on
the amount covered in respect of eligible borrower becomes payable by the Member lending institution to the Trust
. (viii) “Non-Performing Assets” means an asset classified as a
non-performing based on the instructions and guidelines issued by the Reserve Bank of India from time to time.
(ix) “Primary security” in respect of a credit facility shall mean the assets created out of the credit facility so extend and/or existing
unencumbered assets which are directly associate with the projector business for which the credit facility has extend
. (x) “Scheme” means the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS-I)
(xi) “SIDBI” means the Small Industries Development Bank of India,
established under Small Industries Development Bank of India Act, 1989 (39 of 1989).
(xii) “Micro and Small Enterprises” As per the MSMED Act, 2006 an “enterprise” means an industrial undertaking or a business concern or any
other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry specified in
the First Schedule to the Industries (Development and Regulation)
Act, 1951 or engaged in providing or rendering of any service or services; and “Micro and Small Enterprises” .
(xiii) “Tenure of guarantee cover” means the maximum period of guarantee cover from Guarantee sanction date which shall run through the agreed tenure of the term credit and for a period of 5 years or block of a 5 years (for a maximum period of 10 years)
from Guarantee start date where working capital facilities alone are extendeor loan termination date, whichever is earlier or such period as may specified by the Trust
(xiv) “Trust” means the Credit Guarantee Fund Trust for Micro and Small Enterprises set up by Government of India and
SIDBI with the purpose of guaranteeing credit facility(ies), extended by the lending institution(s) to the eligible borrowers.
(xv) “Third Party Guarantee” means any guarantee obtained by a Member Lending Institution in connection with
the credit facility extended by it to a borrower except from Sole-Proprietor in case of Sole Proprietary concern, Partners in case of partnership / limited liability partnership,
Trustees in case of Trust, Karta & Coparceners in case of HUF and promoter directors in 3 case of private/ public limited companies and owner of
the immovable property in case of guarantee under Hybrid / Partial collateral security model.
II . SCOPE AND EXTENT OF THE SCHEME
Guarantees by the Trust
(i) 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.
(ii) 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
The Trust shall cover credit facilities (Fund based and/or Non fund based)
extended by Member Lending Institution(s) to a single eligible borrower in the Micro and Small Enterprises sector for credit facility
(i) not exceeding ₹50 lakh (Regional Rural Banks/Financial Institutions)
(ii) not exceeding RS 200 lakh (Scheduled Commercial Banks, select Financial Institutions and Non Banking Financial Companies (NBFCs);
(iii)not exceeding RS 50 lakh for Small Finance Banks
(SFBs)byway of term loan and/or working capital
facilities on or after entering into an agreement
withthe Trust, without any collateral security and/or third
party guarantees or such amount as may decide by the Trust from time to time.
CGTMSE had also introduce a new “Hybrid Security”
product where the MLIs will allowed to obtain collateral security for a part of the credit facility,
whereas the remaining unsecure part of the credit facility, upto a maximum of ₹200 lakh, can be cover under CGS-I.
CGTMSE will, however, have pari-passu charge on
the primary security as well as on the collateral security provided by the borrower for the credit facilities extended.
Under the hybrid security product, there is no requirement
4 for MLIs to create security / charge in favor of CGTMSE by way of legal documentation