Page 40 - Banking Finance January 2020

ARTICLE

As on 31.03.2017, CGTMSE approved over 27.72 lakh can be covered under CGTMSE. Facility of more than
accounts with an cumulative outstanding of more than Rs. Rs. 200 lakh can also be covered however, the
1.28 lakh crores. In view of the positive impact CGTMSE has guarantee will be limited to Rs. 200 lakh.
on credit flow to MSE sector the corpus of the trust has been
Y For Retail Trade activity, maximum coverage is to the
enhanced to Rs. 7500 crores fully contributed by the Govt extent to Rs. 100 lakhs.
of India.
Y All types of constitutions are eligible for guarantee

CGTMSE operates through Member Lending Institutions coverage.
(MLIs). Presently more than 110 institutions viz PSBs, Private Y Existing Working Capital loans can be covered under
Banks, RRBs and Foreign Banks are member to it. Recently CGTMSE at the time of renewal if it satisfies all the
it has also permitted select NBFCs and Small Finance Banks criteria for coverage.
to be the MLI. Y Existing Term Loan can't be covered under CGTMSE at
the time of review/renewal even if it satisfies all the
With the rapidly changing banking scenario in present day, criteria for coverage.
CGTMSE also needed to refine and redefine its offerings and
Y Entities must have Udyog Aadhar Number (UAN) which
guidelines which it did indeed and in the last 8-9 months,
is mandatory to obtain coverage. UAN can be
many of the guidelines of CGTMSE have been redefined and
generated on website http://em.msme.gov.in.
circulated. The offering and guidelines discussed here are
updated as on 28.02.2019. Y Additional Term Loan limit can also be covered subject
to limit of Rs. 200 lakh.
Eligibility: Y As the guarantee coverage is unit-wise and not
Y As the name CGTMSE itself suggests, Micro & Small borrower-wise, coverage of upto Rs. 200 lakh per unit
enterprises in manufacturing and service industry as per may be extended to multiple units of the same
MSME Act 2006 are eligible for guarantee coverage. borrower.
Y With effect from 01.04.2018 Retail Traders coming Y Separate limits sanctioned to the same unit can also be
under MSE sector are eligible for guarantee coverage. covered upto the ceiling of Rs. 200 lakh.

Y Accounts where collateral security is taken, unsecured Y Account must not have become irregular/bad/overdue/
part of the loan upto Rs. 200 lakh is also eligible for sub-standard/SMA at the time of application or
guarantee coverage. This is called Hybrid Security where payment of Annual Guarantee Fee (AGF).
CGTMSE has second charge on the collateral. Y A unit availing total limit of Rs. 200 lakh and on
subsequent adjustment of any loan, can't get coverage
Not eligible: for the additional loan to the extent of the gap.
Y Accounts where the type of activity is not
manufacturing, service or retail trade shall be
disqualified for coverage under the scheme.

Y Self Help Group (SHG) and Joint Liability Group (JLG) may
come under MSE, but not eligible for guarantee
coverage.
Y Educational and Training Institutes may come under
MSE, but not eligible for guarantee coverage.
Y Any account where third party guarantee is taken is not
eligible for guarantee coverage under CGTMSE.

Features:
Y Facility upto Rs. 200 lakh (Fund Based + Non Fund Based)

40 | 2020 | JANUARY | BANKING FINANCE