CGTMSE

Credit Guarantee Fund Trust forCredit Guarantee Fund Trust forMicro and Small EnterprisesMicro and Small Enterprises

(CGTMSE)(CGTMSE)Presentation onPresentation on

Credit Guarantee SchemeCredit Guarantee Schemebyby

B S BishtB S Bisht

Micro, Small & Medium Micro, Small & Medium EnterprisesEnterprises

New Nomenclature & New Nomenclature & ClassificationClassification

Enterprises

Manufacturing(Ceiling on investment in Plant & Machinery)

Service(Ceiling on investment

in Equipment)

Micro

Small

Medium

Rs.25 lakhRs. 10 lakh

Rs.5 crore Rs.2 crore

Rs.10 crore

Rs.5 crore

Micro & Small Enterprises - Micro & Small Enterprises - ImportanceImportance

Provide employment to more than 40 Million Provide employment to more than 40 Million personspersons

Largest employment generating sector after Largest employment generating sector after agricultureagriculture

Employment potential at low capital costEmployment potential at low capital cost

Constitute 95Constitute 95%% of industrial units of industrial units

Total of 13 Million registered / unregistered MSEsTotal of 13 Million registered / unregistered MSEs

Key contributors to national economy Key contributors to national economy 45% of manufacturing output 45% of manufacturing output

40% of total exports40% of total exports

9% of Gross Domestic Product9% of Gross Domestic Product

Facilitating Collateral-free Credit to Micro & Small Enterprises

Policy makers world overPolicy makers world over

Strive for equitable wealth distributionStrive for equitable wealth distribution

Desire to direct credit flow to specific Desire to direct credit flow to specific sectorssectors

Seek to evolve mechanisms to achieve Seek to evolve mechanisms to achieve developmental objectivesdevelopmental objectives

Aspire for financial inclusion / overall Aspire for financial inclusion / overall economic developmenteconomic development

Govern Banks for social empowermentGovern Banks for social empowerment

Guarantee Framework - Guarantee Framework - NeedNeed


Banks exposed to various risks while Banks exposed to various risks while

lendinglending

Default Risk factor - deterrent in MSE Default Risk factor - deterrent in MSE

lending lending

Collateral - conventional risk mitigation Collateral - conventional risk mitigation

tooltool

Lack of Collateral – commonly stated Lack of Collateral – commonly stated

obstacleobstacle

Micro & Small Enterprises adversely Micro & Small Enterprises adversely

affectedaffected

Need for alternate risk mitigation Need for alternate risk mitigation

mechanismmechanism

Guarantee Framework - Guarantee Framework - NeedNeed


Advocated as effective credit Advocated as effective credit

supplementation toolsupplementation tool

Largely promoted / sponsored by Largely promoted / sponsored by

GovernmentGovernment

Dates back to 1936 in JapanDates back to 1936 in Japan

Gained acceptance in Europe – 1950’sGained acceptance in Europe – 1950’s

Well evolved in most developed economiesWell evolved in most developed economies

Multiple agencies operate in some Multiple agencies operate in some

countriescountries

Credit Guarantee – Global Credit Guarantee – Global scenarioscenario


Export Credit Guarantee Corporation of India Ltd – Export Credit Guarantee Corporation of India Ltd – established in 1957 – to cover risk of exporting on established in 1957 – to cover risk of exporting on creditcredit

Credit Guarantee Scheme for Small Scale Industries Credit Guarantee Scheme for Small Scale Industries introduced in July, 1960 with Reserve Bank of India introduced in July, 1960 with Reserve Bank of India (RBI) as Administrator. RBI operated the scheme up to (RBI) as Administrator. RBI operated the scheme up to March, 1981March, 1981

Credit Guarantee Corporation of India Ltd – Credit Guarantee Corporation of India Ltd – established in 1971 – to guarantee loans under established in 1971 – to guarantee loans under priority sectorpriority sector

Merged with Deposit Insurance Corporation in 1978 to Merged with Deposit Insurance Corporation in 1978 to form Deposit Insurance and Credit Guarantee form Deposit Insurance and Credit Guarantee Corporation (DICGC)Corporation (DICGC)

Credit guarantee schemes of the Corporation Credit guarantee schemes of the Corporation discontinued as the credit institutions gradually discontinued as the credit institutions gradually opted out of the schemeopted out of the scheme

Credit Guarantee in Credit Guarantee in IndiaIndia


Set up as a Trust in August, 2000 Set up as a Trust in August, 2000 and administered by a Board of and administered by a Board of TrusteesTrustees

Government of India and Small Government of India and Small Industries Development Bank of Industries Development Bank of India (SIDBI) – the settlors – India (SIDBI) – the settlors – Contribution ratio 4 :1Contribution ratio 4 :1

Initial Corpus – Rs.125 crore ; Initial Corpus – Rs.125 crore ; Present Corpus – Rs.1907 crore ; Present Corpus – Rs.1907 crore ; Committed Corpus – Rs.2500 croreCommitted Corpus – Rs.2500 crore

CGTMSE - CGTMSE - EstablishmentEstablishment


Shift from collateral to merit based lendingShift from collateral to merit based lending

Act as mechanism of entrepreneurship Act as mechanism of entrepreneurship promotionpromotion

Facilitate institutional credit flow to MSE Facilitate institutional credit flow to MSE sectorsector

Address growth constraints of MSE sectorAddress growth constraints of MSE sector

Enable financial inclusion / employment Enable financial inclusion / employment generation generation

Revive confidence in credit guarantee Revive confidence in credit guarantee mechanismmechanism

CGTMSE - CGTMSE - ObjectivesObjectives


Credit Guarantee Scheme Credit Guarantee Scheme

(CGS)(CGS)

Operated through Banks / Lending Institutions Operated through Banks / Lending Institutions registered as Member Lending Institutions registered as Member Lending Institutions (MLIs)(MLIs)

Scheduled Commercial Banks / select Regional Scheduled Commercial Banks / select Regional Rural Banks (RRBs) / other lending institutions Rural Banks (RRBs) / other lending institutions as approved by Ministry of MSME eligible to as approved by Ministry of MSME eligible to register as MLIsregister as MLIs

97 Banks / RRBs / other lending institutions 97 Banks / RRBs / other lending institutions registered as MLIs with CGTMSE registered as MLIs with CGTMSE

Operations done through web-based B2B E-Operations done through web-based B2B E-Business softwareBusiness software


CGS - DefinitionsCGS - Definitions

Collateral SecurityCollateral Security – Security provided in – Security provided in addition to the primary security, in addition to the primary security, in connection with the credit facility connection with the credit facility extended to the borrowerextended to the borrower

Primary SecurityPrimary Security – Assets created out of – Assets created out of the credit facility extended and / or the credit facility extended and / or existing unencumbered assets which are existing unencumbered assets which are directly associated with the project or directly associated with the project or business for which the credit facility has business for which the credit facility has been extendedbeen extended


CGS – Cardinal CGS – Cardinal PrinciplesPrinciples

Lender should extend credit without Lender should extend credit without obtaining any Collateral Security / obtaining any Collateral Security / Third Party GuaranteeThird Party Guarantee

Interest Rate levied should be in Interest Rate levied should be in accordance with Government / accordance with Government / Reserve Bank of India guidelines / Reserve Bank of India guidelines / not more than 3% of lending Bank’s not more than 3% of lending Bank’s PLRPLR


CGS – Eligible Credit CGS – Eligible Credit facilitiesfacilities

Credit facility upto Rs.100 lakh sanctioned to MSEs (both Credit facility upto Rs.100 lakh sanctioned to MSEs (both manufacturing and service sector including small road manufacturing and service sector including small road and water transport operators, small business, and water transport operators, small business, professionals, self-employed persons and all other professionals, self-employed persons and all other service enterprises under the ambit of MSEs as per RBI service enterprises under the ambit of MSEs as per RBI guidelines on “Lending to Priority Sector” but guidelines on “Lending to Priority Sector” but excluding excluding retail traderetail trade))

Both Fund & Non-fund based Credit facilities viz., term Both Fund & Non-fund based Credit facilities viz., term loan, working capital, composite credit, LCs, loan, working capital, composite credit, LCs, Guarantees, etc. can be covered. Guarantees, etc. can be covered. Credit proposals above Credit proposals above Rs.50 lakh will have to be rated internally and should be Rs.50 lakh will have to be rated internally and should be of investment gradeof investment grade

Credit Facility of above Rs.100 lakh can also be covered, Credit Facility of above Rs.100 lakh can also be covered, but Guarantee Cover will be limited to Rs.62.50 lakh. No but Guarantee Cover will be limited to Rs.62.50 lakh. No collateral security / third party guarantee shall be collateral security / third party guarantee shall be obtained by the MLI for credit facility above Rs.100 lakhobtained by the MLI for credit facility above Rs.100 lakh


CGS – Special CGS – Special inclusionsinclusions

Certain activities under Agri-Clinics and Certain activities under Agri-Clinics and Agri-Business Centres (ACABCs)Agri-Business Centres (ACABCs) like like Tissue Culture, Feed Processing & Testing Tissue Culture, Feed Processing & Testing Units, Honey & Bee product processing Units, Honey & Bee product processing units, Seed Processing Units, Setting up units, Seed Processing Units, Setting up of Information Kiosks / Cool Chain, etc. of Information Kiosks / Cool Chain, etc. made eligible for guarantee cover under made eligible for guarantee cover under the schemethe scheme

Borrower may be sanctioned distinct / Borrower may be sanctioned distinct / separate credit facilities, but only credit separate credit facilities, but only credit facility not backed by collateral security / facility not backed by collateral security / third party guarantee can be covered third party guarantee can be covered under the Schemeunder the Scheme


CGS – Extent of CGS – Extent of GuaranteeGuarantee

Credit facilities extended by more Credit facilities extended by more than one bank and / or financial than one bank and / or financial institution jointly and / or separately institution jointly and / or separately to eligible borrower upto a maximum to eligible borrower upto a maximum of Rs.100 lakh per borrower subject to of Rs.100 lakh per borrower subject to ceiling amount of individual MLI or ceiling amount of individual MLI or such amount as may be specified by such amount as may be specified by the Trust, in the order in which the the Trust, in the order in which the application for guarantee cover has application for guarantee cover has been lodgedbeen lodged




Borrower Borrower CategoryCategory

Maximum Guarantee Cover, Maximum Guarantee Cover,

where credit facility iswhere credit facility is

Upto Upto

Rs.5 Rs.5 lakhlakh

Above Rs.5 Above Rs.5 lakh upto lakh upto Rs.50 lakhRs.50 lakh

Above Rs.50 Above Rs.50 lakh upto lakh upto

Rs.100 lakhRs.100 lakh

Micro EnterprisesMicro Enterprises

85% of 85% of Amount in Amount in Default / Default / Rs.4.25 Rs.4.25

lakhlakh

75% of Amount 75% of Amount in Default in Default

/ Rs.37.50 lakh/ Rs.37.50 lakh

Rs.37.50 lakh plus Rs.37.50 lakh plus 50% of amount in 50% of amount in

default above Rs.50 default above Rs.50 lakh / Rs.62.50 lakhlakh / Rs.62.50 lakh

Women Women Entrepreneurs / Entrepreneurs / Units located in Units located in

North East Region North East Region (incl. Sikkim)(incl. Sikkim)

80% of Amount in Default 80% of Amount in Default

/ Rs.40 lakh/ Rs.40 lakh

Rs.40 lakh plus 50% Rs.40 lakh plus 50% of amount in default of amount in default above Rs.50 lakh / above Rs.50 lakh /

Rs.65 lakhRs.65 lakh

All other category of All other category of borrowersborrowers

75% of Amount in Default / 75% of Amount in Default / Rs.37.50 lakhRs.37.50 lakh

Rs.37.50 lakh plus Rs.37.50 lakh plus 50% of amount in 50% of amount in

default above Rs.50 default above Rs.50 lakh / Rs.62.50 lakhlakh / Rs.62.50 lakh



QuantuQuantum of m of

Credit Credit FacilityFacility

Max. Max. Guarantee Guarantee amount @ amount @ 75% upto 75% upto Rs.50 lakhRs.50 lakh

Guaranteed Guaranteed amount @ amount @

50% on 50% on incremental incremental

credit facility credit facility above Rs.50 above Rs.50

lakhlakh

Total Total GuaranteGuarante

ed ed AmountAmount

Effective Effective GuarantGuarant

ee ee CoveragCoverag

e (%)e (%)

5050 37.5037.50 0.000.00 37.5037.50 75.0075.00

6060 37.5037.50 5.005.00 42.5042.50 70.8370.83

7070 37.5037.50 10.0010.00 47.5047.50 67.8567.85

8080 37.5037.50 15.0015.00 52.5052.50 65.6265.62

9090 37.5037.50 20.0020.00 57.5057.50 63.8863.88

100100 37.5037.50 25.0025.00 62.5062.50 62.5062.50

(Rs. / Lakh)(Rs. / Lakh)

CGS – Tenure of CGS – Tenure of GuaranteeGuarantee

Tenure of Guarantee Cover for Term Credit, Tenure of Guarantee Cover for Term Credit, Combined Working Capital & Term Credit and Combined Working Capital & Term Credit and Composite Credit is tenure of Term Credit / Composite Credit is tenure of Term Credit / Composite Credit or loan termination date, Composite Credit or loan termination date, whichever is earlierwhichever is earlier

Where Working Capital facility alone is Where Working Capital facility alone is covered, the tenure is for a block of five years covered, the tenure is for a block of five years or loan termination date, whichever is earlier. or loan termination date, whichever is earlier. Thereafter, MLI should apply for renewal of Thereafter, MLI should apply for renewal of Guarantee CoverGuarantee Cover

If tenure of Term Loan is 3 years, tenure of If tenure of Term Loan is 3 years, tenure of working capital will also be 3 years. After 3 working capital will also be 3 years. After 3 years, if guarantee cover is to be continued for years, if guarantee cover is to be continued for working capital, application for renewal to be working capital, application for renewal to be lodged onlinelodged online


CGS – Application CGS – Application LodgementLodgement

For credit facility sanctioned in a particular quarter, application For credit facility sanctioned in a particular quarter, application for Guarantee Cover should be lodged by the end of the next for Guarantee Cover should be lodged by the end of the next quarter quarter

To illustrate, for credit sanctioned during Jul-Sep quarter, To illustrate, for credit sanctioned during Jul-Sep quarter, application for Guarantee Cover can be lodged upto December application for Guarantee Cover can be lodged upto December 31 (last date of next quarter). Thus maximum time of 6 months 31 (last date of next quarter). Thus maximum time of 6 months and minimum time of 3 months is available for lodging of and minimum time of 3 months is available for lodging of applicationapplication

In case of Working Capital Credit, date of renewal / review / In case of Working Capital Credit, date of renewal / review / enhancement can be taken as date of sanctionenhancement 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 be lodged after release of collateral, subject to time limits specified lodged after release of collateral, subject to time limits specified for application lodgementfor application lodgement

Account should not have become overdue / bad / doubtful of Account should not have become overdue / bad / doubtful of recovery / adjusted for debts deemed bad or doubtful of recovery / adjusted for debts deemed bad or doubtful of recovery as on date of application / payment of guarantee feerecovery as on date of application / payment of guarantee fee


CGS – Guarantee CGS – Guarantee FeeFee

On approval of Guarantee Cover, Demand Advice for On approval of Guarantee Cover, Demand Advice for Guarantee Fee is generated by the system and is to be Guarantee Fee is generated by the system and is to be paid paid upfrontupfront for commencement of Guarantee Cover for commencement of Guarantee Cover

In enhancement cases, Guarantee Fee is calculated on pro-In enhancement cases, Guarantee Fee is calculated on pro-rata basis for residual tenure of guarantee rata basis for residual tenure of guarantee

In case of working capital, payment is to be made within In case of working capital, payment is to be made within one month from Demand Advice date and in case of term one month from Demand Advice date and in case of term credit, one month from date of first disbursement / credit, one month from date of first disbursement / demand advice date, whichever is laterdemand advice date, whichever is later

Present Guarantee Fee rate is 1% of credit facility Present Guarantee Fee rate is 1% of credit facility sanctioned for loans upto Rs.5 lakh and 1.5% of credit sanctioned for loans upto Rs.5 lakh and 1.5% of credit facility sanctioned for loans above Rs.5 lakhfacility sanctioned for loans above Rs.5 lakh

For units located in NER (incl. Sikkim), the Guarantee Fee For units located in NER (incl. Sikkim), the Guarantee Fee rate is 0.75% of credit facility sanctioned for loans upto rate is 0.75% of credit facility sanctioned for loans upto Rs.50 lakh and 1.5% of credit facility sanctioned for loans Rs.50 lakh and 1.5% of credit facility sanctioned for loans above Rs.50 lakhabove Rs.50 lakh


CGS – Annual Service CGS – Annual Service FeeFee

Annual Service Fee (ASF) is to be paid for all accounts Annual Service Fee (ASF) is to be paid for all accounts for which Guarantee Cover has been availed / is in for which Guarantee Cover has been availed / is in force in a financial year, at the beginning of the next force in a financial year, at the beginning of the next financial year i.e., ASF is collected in “arrears” and is financial year i.e., ASF is collected in “arrears” and is calculated pro-rata for the first and last years.calculated pro-rata for the first and last years.

To illustrate for guarantee cover availed during To illustrate for guarantee cover availed during FY2009, payment of ASF is to be made within 60 days FY2009, payment of ASF is to be made within 60 days from the end of the financial year i.e., May 31, 2009from the end of the financial year i.e., May 31, 2009

If payment is not received within stipulated period, If payment is not received within stipulated period, Guarantee Cover lapses and account is liable to be Guarantee Cover lapses and account is liable to be closed. Annual Service Fee is to be paid till closed. Annual Service Fee is to be paid till disbursement of first installment of claimdisbursement of first installment of claim

Present Service Fee rate is 0.50% of credit facility Present Service Fee rate is 0.50% of credit facility sanctioned for loans upto Rs.5 lakh and 0.75% of sanctioned for loans upto Rs.5 lakh and 0.75% of credit facility sanctioned for loans above Rs.5 lakhcredit facility sanctioned for loans above Rs.5 lakh


CGS – Cost of CGS – Cost of GuaranteeGuarantee


Credit FacilityCredit Facility

Upfront Guarantee Upfront Guarantee FeeFee

Annual Annual Service Service

Fee Fee

North East North East RegionRegion(incl. (incl.

Sikkim)Sikkim)

OthersOthers

Upto Rs.5 lakhUpto Rs.5 lakh 0.75%0.75% 1.00%1.00% 0.50%0.50%

Above Rs.5 lakh to Rs.50 Above Rs.5 lakh to Rs.50 lakhlakh 0.75%0.75% 1.50%1.50% 0.75%0.75%

Above Rs.50 lakh to Rs.100 Above Rs.50 lakh to Rs.100 lakhlakh 1.50%1.50% 1.50%1.50% 0.75%0.75%MLIs at their discretion may pass on the cost of Guarantee MLIs at their discretion may pass on the cost of Guarantee Cover to the borrowers. However, responsibility of Cover to the borrowers. However, responsibility of payment of Guarantee / Service Fee to the Trust will be on payment of Guarantee / Service Fee to the Trust will be on MLIsMLIs

CGS – Time limitsCGS – Time limits


Lodgement of Lodgement of ApplicationApplication

(linked to (linked to

Sanction Date)Sanction Date)

End of next quarter (For credit facility End of next quarter (For credit facility sanctioned during the quarter, Jul-Sep, sanctioned during the quarter, Jul-Sep, 2009, application for Guarantee Cover can 2009, application for Guarantee Cover can be lodged upto December 31, 2009)be lodged upto December 31, 2009)

Payment of Payment of Guarantee FeeGuarantee Fee

(linked to (linked to

Disbursement / Disbursement / Demand Date)Demand Date)

30 days from date of Demand / first 30 days from date of Demand / first disbursement, whichever is later (Eg. if disbursement, whichever is later (Eg. if demand advice date is June 10, 2009 and demand advice date is June 10, 2009 and first disbursement is on June 28, 2009, first disbursement is on June 28, 2009, guarantee fee should be paid within 30 guarantee fee should be paid within 30 days from June 28, 2009)days from June 28, 2009)

Payment of Payment of

Annual Service Annual Service FeeFee

(linked to close (linked to close of financial of financial

year)year)

May 31 of next Financial Year (For May 31 of next Financial Year (For guarantee cover availed during FY2009, guarantee cover availed during FY2009, ASF was to be paid by May 31, 2009). ASF was to be paid by May 31, 2009). Annual Service Fee is to be paid till Annual Service Fee is to be paid till disbursement of first installment of claimdisbursement of first installment of claim

CGS – Lodging of CGS – Lodging of claimsclaims

Claim to be lodged by within a maximum period Claim to be lodged by within a maximum period of one year from date of NPA, if NPA is after of one year from date of NPA, if NPA is after lock-in period or within one year of expiry of lock-in period or within one year of expiry of lock-in period, if NPA is within lock-in periodlock-in period, if NPA is within lock-in period

Pre-requisites for lodging claims arePre-requisites for lodging claims are

Guarantee Cover is in forceGuarantee Cover is in force

Account classified as NPAAccount classified as NPA

Recall Notice issuedRecall Notice issued

Lock-in period expiredLock-in period expired

Recovery proceedings initiatedRecovery proceedings initiated



Guarantee Cover is in ForceGuarantee Cover is in Force Guarantee Cover in respect of the facility was Guarantee Cover in respect of the facility was

in force at the time of account turning NPA and in force at the time of account turning NPA and there are no arrears in payment of ASF. there are no arrears in payment of ASF.

Lock-in PeriodLock-in Period 18 months from guarantee start date or last 18 months from guarantee start date or last

date of disbursement, which ever is laterdate of disbursement, which ever is later

Recovery proceedings initiatedRecovery proceedings initiated Suit for recovery of primary security should be Suit for recovery of primary security should be

filed with Lok Adalat / RRA / Civil Court / DRT / filed with Lok Adalat / RRA / Civil Court / DRT / SARFAESI Act SARFAESI Act



If recovery proceedings are initiated If recovery proceedings are initiated under SARFAESI Act, action as per under SARFAESI Act, action as per Section 13(4) of the Act, has to be Section 13(4) of the Act, has to be takentaken

Back–ended Subsidy, if any, should be Back–ended Subsidy, if any, should be indicatedindicated

Declaration and Undertaking is to be Declaration and Undertaking is to be signed by an officer not below the signed by an officer not below the rank of Assistant General Managerrank of Assistant General Manager


CGS – Claim CGS – Claim SettlementSettlement

Two stage claim settlement processTwo stage claim settlement process First installment of 75% of guaranteed portion First installment of 75% of guaranteed portion

of of Amount in DefaultAmount in Default will be paid within 30 will be paid within 30 days of receipt of complete informationdays of receipt of complete information

Interest at prevailing Bank Rate will be paid in Interest at prevailing Bank Rate will be paid in case of delay beyond 30 dayscase of delay beyond 30 days

Second installment shall be paid on Second installment shall be paid on conclusion of recovery proceedingsconclusion of recovery proceedings

On conclusion of recovery proceedings, final On conclusion of recovery proceedings, final loss is shared by CGTMSE and MLI, in the ratio loss is shared by CGTMSE and MLI, in the ratio ranging from 85 : 15 to 62.5 : 37.5, as the ranging from 85 : 15 to 62.5 : 37.5, as the case may becase may be



Amount in DefaultAmount in Default - Outstanding in the - Outstanding in the account, both principal & interest, as on account, both principal & interest, as on date of NPA or the date of lodgement of date of NPA or the date of lodgement of the claim application, whichever is lower, the claim application, whichever is lower, subject to maximum of amount guaranteedsubject to maximum of amount guaranteed

Recoveries made after NPA date / payment Recoveries made after NPA date / payment of first installment of claim should be of first installment of claim should be remitted to CGTMSE after deducting legal remitted to CGTMSE after deducting legal expenses, if anyexpenses, if any

MLI’s may use OTS / Compromise MLI’s may use OTS / Compromise settlement route for recovery. CGTMSE has settlement route for recovery. CGTMSE has to be informed if such settlement is to be informed if such settlement is negotiatednegotiated




Amount in Default on NPA DateAmount in Default on NPA Date Rs.8 lakhRs.8 lakh

CGTMSE’s Liability (75%)CGTMSE’s Liability (75%) Rs.6 lakhRs.6 lakh

First installment paid by CGTMSE First installment paid by CGTMSE (75% of (75% of liability)liability)

Rs.4.5 lakhRs.4.5 lakh

Recovery from Primary Security remitted Recovery from Primary Security remitted to CGTMSE, after adjusting legal expensesto CGTMSE, after adjusting legal expenses Rs.1 lakhRs.1 lakh

Net Amount in Default (Final Loss)Net Amount in Default (Final Loss) Rs.7 lakhRs.7 lakh

Second installment payable by CGTMSE Second installment payable by CGTMSE

(Rs.5.25 lakh minus Rs.4.50 lakh)(Rs.5.25 lakh minus Rs.4.50 lakh)Rs.75,000Rs.75,000

Final payout to MLI (Recovery from Final payout to MLI (Recovery from Primary Security remitted + 2Primary Security remitted + 2ndnd Installment)Installment)

Rs.1.75 Rs.1.75 lakhlakh

Scenario-IScenario-I










(Rs.4.50 lakh minus Rs.4.50 lakh)(Rs.4.50 lakh minus Rs.4.50 lakh)NILNIL


Rs.2 lakhRs.2 lakh

Scenario-IIScenario-II










(Rs.3 lakh minus Rs.4.50 lakh)(Rs.3 lakh minus Rs.4.50 lakh)(-)Rs.1.5 (-)Rs.1.5 lakhlakh



Scenario-IIIScenario-III

PerformancePerformance

ApprovalApprovalss

TimeTime PeriodPeriod

1st 1st 50,00050,000

6 years 1 6 years 1 monthmonth

(Aug. 2000 to (Aug. 2000 to Sep. 2006)Sep. 2006)

2nd 2nd 50,00050,000

1 year 7 1 year 7 monthsmonths

(Oct. 2006 to (Oct. 2006 to Jun. 2008)Jun. 2008)

3rd 3rd 50,00050,000 9 months9 months (Jul. 2008 to (Jul. 2008 to

Mar. 2009)Mar. 2009)

4th 4th 50,00050,000 6 months 6 months (Apr. 2009 to (Apr. 2009 to

Sep. 2009)Sep. 2009)Facilitating Collateral-free Credit to Micro & Small Enterprises

CGS - Yearwise CGS - Yearwise PerformancePerformance


PeriodPeriod MLIs availingMLIs availing

guarantee guarantee covercover

Guarantees Guarantees approvedapproved

AmountAmount

(Rs. Crore)(Rs. Crore)

FY2001FY2001 99 951951 6.066.06FY2002FY2002 1616 22962296 29.5229.52FY2003FY2003 2222 49554955 58.6758.67FY2004FY2004 2929 66036603 117.60117.60FY2005FY2005 3232 84518451 267.46267.46FY2006FY2006 3636 1628416284 461.91461.91FY2007FY2007 4040 2745727457 704.53704.53FY2008FY2008 4747 3028530285 1055.841055.84FY2009FY2009 5757 5370853708 2199.402199.40FY2010FY2010 7070 6511065110 3066.803066.80

TotalTotal 216100216100 7967.827967.82

(as on October 31, 2009)(as on October 31, 2009)

CGS – Top 10 MLIs - CumulativeCGS – Top 10 MLIs - Cumulative

SNoSNo MLIMLI No.No.Amount Amount

(Rs. Crore)(Rs. Crore)

11 State Bank of IndiaState Bank of India 4317143171 1253.611253.61

22 Canara BankCanara Bank 3351933519 785.67785.67

33 Punjab National BankPunjab National Bank 2906929069 800.05800.05

44 Bank of IndiaBank of India 2532525325 1302.011302.01

55 Allahabad BankAllahabad Bank 76977697 197.19197.19

66 Union Bank of IndiaUnion Bank of India 72787278 262.13262.13

77State Bank of Bikaner & State Bank of Bikaner & JaipurJaipur 62846284 65.1065.10

88 Central Bank of IndiaCentral Bank of India 47924792 277.12277.12

99 Syndicate BankSyndicate Bank 47294729 255.27255.27

1010 State Bank of TravancoreState Bank of Travancore 46894689 103.62103.62

(As on October 31, 2009)(As on October 31, 2009)


CGS – Top 10 MLIs – CGS – Top 10 MLIs – FY2010FY2010

S.NoS.No MLIMLI No.No. Amount (Rs. Amount (Rs. Crore)Crore)

11 State Bank of IndiaState Bank of India 1179311793 435.95435.95

22 Punjab National BankPunjab National Bank 1169311693 470.60470.60

33 Bank of IndiaBank of India 93949394 604.24604.24

44 Canara BankCanara Bank 40564056 161.53161.53

55 Allahabad BankAllahabad Bank 37193719 101.73101.73

66State Bank of Bikaner & State Bank of Bikaner & JaipurJaipur 29572957 29.5729.57

77 Syndicate BankSyndicate Bank 20982098 102.57102.57

88 Bank of BarodaBank of Baroda 20672067 148.78148.78

99 Indian Overseas BankIndian Overseas Bank 16901690 51.8651.86

1010 Union Bank of IndiaUnion Bank of India 16601660 93.1493.14

( As on October 31, 2009)( As on October 31, 2009)


BOB- CGS – Top 10 Regions – BOB- CGS – Top 10 Regions – FY2010FY2010

S.NS.Noo

MLIMLI No.No. Amount (Rs. Amount (Rs. Lakhs)Lakhs)

11 AjmerAjmer 476476 663.80663.80

22 JaipurJaipur 473473 1787.711787.71

33 UdaipurUdaipur 452452 433.51433.51

44 AhmedabadAhmedabad 309309 4880.314880.31

55 PunePune 247247 1821.451821.45

66 KanpurKanpur 242242 2387.232387.23

77 JodhpurJodhpur 239239 1480.611480.61

88 LucknowLucknow 215215 1522.371522.37

99 Mumbai Metro NorthMumbai Metro North 207207 735.39735.39

1010 KerlaKerla 181181 1355.941355.94

(Based on Cumulative guarantee approval on November (Based on Cumulative guarantee approval on November 15, 2009)15, 2009)


BOB- CGS – Top 10 Regions – BOB- CGS – Top 10 Regions – FY2010FY2010

S.NS.Noo

MLIMLI No.No. Amount (Rs. Amount (Rs. Lakhs)Lakhs)

11 JaipurJaipur 267267 1012.791012.79

22 AjmerAjmer 234234 565.80565.80

33 UdaipurUdaipur 194194 223.19223.19

44 Mumbai Metro NorthMumbai Metro North 187187 473.89473.89

55 AhmedabadAhmedabad 136136 2142.342142.34

66 JodhpurJodhpur 132132 672.51672.51

77 Mumbai Metro EastMumbai Metro East 101101 390.80390.80

88 VaranasiVaranasi 8989 486.80486.80

99 Pune Pune 7878 444.26444.26

1010 AllahabadAllahabad 7878 294.19294.19

(Based on approvals(Based on approvals for FY2010 as on November for FY2010 as on November 15, 2009)15, 2009)


CGS – BenefitsCGS – Benefits Credit facilities guaranteed under the Scheme carry Zero Credit facilities guaranteed under the Scheme carry Zero

per cent Risk Weight / Provisioning for guaranteed per cent Risk Weight / Provisioning for guaranteed portion (RBI Circular DBOD No.BP.BC.128/21.04.048/00-portion (RBI Circular DBOD No.BP.BC.128/21.04.048/00-01 dated June 07, 2001)01 dated June 07, 2001)

Reduction in waiting period for recovery through legal Reduction in waiting period for recovery through legal process, realising the time value of money with hassle process, realising the time value of money with hassle free & quick recovery of major portion of defaulted free & quick recovery of major portion of defaulted amount amount

Quicker dispensation of credit due to time saved on Quicker dispensation of credit due to time saved on security creation / Title related issues of collateralssecurity creation / Title related issues of collaterals

In case of collateral, it is Bank’s responsibility to insure / In case of collateral, it is Bank’s responsibility to insure / secure the property when asset is taken oversecure the property when asset is taken over

Overall significant saving in Time & Energy cost of Overall significant saving in Time & Energy cost of Bank’s Human ResourcesBank’s Human Resources


CGS - BenefitsCGS - Benefits

Credit Guarantee Scheme - A tool Credit Guarantee Scheme - A tool for for

Widening of credit portfolioWidening of credit portfolio

Better management of riskBetter management of risk

Faster recovery of duesFaster recovery of dues

Enhancement of profitabilityEnhancement of profitability


Role of Credit Role of Credit GuaranteeGuarantee

A weak project cannot be turned into a A weak project cannot be turned into a viable one with guarantee cover and is viable one with guarantee cover and is only an additional comfort to the lender, only an additional comfort to the lender, as is collateral securityas is collateral security

Banks should evaluate credit applications Banks should evaluate credit applications by using prudent banking judgement / by using prudent banking judgement / due diligence / business discretion in due diligence / business discretion in supporting only viable projects under the supporting only viable projects under the Credit Guarantee Scheme and conduct Credit Guarantee Scheme and conduct the account(s) of the borrowers with the account(s) of the borrowers with normal banking prudencenormal banking prudence


Help us serve you Help us serve you betterbetter

Please furnish the following details Please furnish the following details while communicating with uswhile communicating with us

Your Member IDYour Member ID

Full address & telephone numberFull address & telephone number

Name and designation of officerName and designation of officer

CGPAN and Name of UnitCGPAN and Name of Unit

Demand Advice Number, while making Demand Advice Number, while making paymentspayments

Keep record of your Member ID, User ID Keep record of your Member ID, User ID and Password in a safe placeand Password in a safe place


We welcome suggestions, advice andWe welcome suggestions, advice andother inputs to improve our servicesother inputs to improve our services

Contact us at :Contact us at :Credit Guarantee Fund Trust for Micro and Small Credit Guarantee Fund Trust for Micro and Small

EnterprisesEnterprises77thth Floor, SME Development Centre Floor, SME Development Centre

Plot No.C-11, ‘G’ BlockPlot No.C-11, ‘G’ BlockBandra Kurla ComplexBandra Kurla Complex

Mumbai-400051Mumbai-400051PPhone : 022-26541803-07, 61437800 (24 lines)hone : 022-26541803-07, 61437800 (24 lines)

Fax : 022-26541821Fax : 022-26541821Website : www.cgtmse.inWebsite : www.cgtmse.in



THANK THANK YOUYOU

bishtbob@[email protected]

CGTMSE

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