Page 27 - Banking Finance May 2025

ARTICLE

Collateral Amount(C) - Rs.40 lakh

Year FY Scenario
Year 1 2024-25 Upfront Contribution Loan sanctioned (S)- Collateral Amount (C) =Rs.100 lakh-Rs.40 lakh
= Rs.60 Lakh
Upfront Contribution=5% of Rs.60 lakh=Rs.3 lakh
Year 2 2025-26 Renewal of Guarantee Outstanding as on March 31, 2025 - Collateral Amount (C)
= Rs.30 lakh - Rs.40 lakh= Negative
No Annual Guarantee Fee (AGF) applicable
2 nd Tranche (D1) + (D2) - (C) =30+20-40 = Rs.10 lakh
Disbursement
on 1/06/2025
AGF will be calculated from 01/06/2025 till 31/03/2026 on Rs.10 lakh
3 rd Tranche (D1) +(D2)+ (D3) - (C)
Disbursement =Rs.(30+20+50-40) lakh = Rs.60 lakh
on 1/09/2025
AGF already paid on Rs.10 lakh for the year. Hence, AGF on
balance amount of Rs.50 lakh will be calculated from 01/09/2025
till 31/03/2026
Year 3 2026-27 Renewal of Guarantee Outstanding as on April 01, 2026 - Collateral Amount
= Rs.(100- 40) lakh= Rs. 60 lakh
AGF will be calculated for FY 2026-27 on Rs.60 lakh

Renewal of Guarantee: MLIs must ensure timely renewal Claim Filing and Settlement
of guarantees each year to continue coverage.
In the event of loan default, banks must follow
a structured claim process:
Reporting Loan Disbursement: Any disbursement must be
entered into the portal within 7 days. NPA Marking: Lenders must mark the loan as NPA within
180 days of the account being so classified.
Interim Claim: Upon filing, 75% of the default amount is
reimbursed within 30 days if all documents are in order.

Final Claim: The remaining 25% is paid once recovery proceed-
ings conclude or when the decree becomes time-barred.

Legal Action Requirement: Before claiming reimbursement,
lenders must initiate legal action via Lok Adalat, Civil Court,
DRT, SARFAESI Act, or NCLT.

Key Considerations for MSMEs and
Lenders
The scheme ensures that MSMEs maintain their MSME sta-
tus at the time of loan sanction, even if they grow into a
large enterprise later. It covers all business activities, with
no restrictions on industry types.

24 | 2025 | MAY | BANKING FINANCE