Page 42 - Banking Finance January 2020

ARTICLE

claim if account turns NPA within 180 days from the X Lock-in Period: There is a lock-in period of 18 months
date of revival of account. from date of start of guarantee cover or last
Y For first year and last year of the loan, AGF is calculated disbursement date whichever is later. During the
on pro-rata basis. lock-in period, claim can't be lodged.
Y Guarantee starts from the date on which AGF is X Lodgement of claim : when an account turns NPA,
credited in CGTMSE's account. claim must be lodged in order to receive payment
from the trust. Lodgement must be done as under:
Refund of Guarantee Fee: o When A/c turns NPA during lock-in period -
Claim must be lodged within 3 years from date
Refund of guarantee fee can only be considered in the of end of lock-in period.
following circumstances:
X Excess remittance. o When A/c turns NPA after lock-in period - Claim
must be lodged within 3 years from date of
X Remittance made more than once for the same
account. A/c turning NPA.
X Closure of account: When a covered account is
X Fee paid where AGF not due.
closed by the borrower, information must be sent
X Fee paid in advance but application not approved to CGTMSE in the same quarter.
for guarantee cover.
X In case of pre-closure, refund of proportionate AGF Lodgement of Claim:
only when closure is marked in CGTMSE portal For NPA accounts, eligibility and process for lodgement of
within 3 months from the date of receipt of fee by
claim entails the following:
CGTMSE.
X Claim must be lodged within 3 years from end of
lock-in period or date of account turning NPA
Extra Rate of Interest: whichever is later.
Extra rate of interest, over and above the applicable rate, X The guarantee should be in force at the time of
will be charged on the accounts covered under CGTMSE as account turning NPA.
under applicable from 01.09.2018:
X Loan > Rs. 2 lakh to Rs. 5 lakh : 0.50% extra X Recovery proceeding must be initiated in the
account including filling of suit in DRT/Civil Court/
X Loan > Rs. 5 lakh to Rs. 50 lakh : 0.75% extra
Lok Adalat/ SARFAESI Act.
X Loan > Rs. 50 lakh to Rs. 200 lakh : 0.90 % extra
X In case of DRT/Civil Suit, filing of case is sufficient.
X Retail Trade : 1.00 % extra
X In case of SARFAESIA, process till serving of
possession notice is to be completed.
Various Time Lines:
X Back ended subsidy, if any, should be adjusted.
Various time lines have been stipulated by CGTMSE within
which certain action has to be completed. X For aggregate outstanding amount eligible for
X Request for cover: Application for guarantee claim settlement does not exceed Rs. 50,000/-,
coverage should be made within end of next initiation of legal proceedings as a pre-conditions
quarter of sanctioning of the loan. for invoking of guarantee is waived. Aggregate
outstanding amount means the total outstanding
X Payment of AGF : First time AGF to be paid within
30 days from CGPAN or first disbursement of of all credit facilities of particular borrower as on
account whichever is later. Subsequent AGF NPA date.
payment by 15th April of every year. X The above is to be approved by an executive

X Account Turning NPA: When an account turns NPA, committee of GMs on case to case basis.
information must be sent to CGTMSE within end of X All the claims are to be submitted online only. Soft
next quarter of account turning NPA. copy of document is to be submitted confirming

42 | 2020 | JANUARY | BANKING FINANCE