C. Credit facilities & parameters
1. What is quantum of credit facility that can be covered under the Scheme?
Fund and non-fund based (Letters of Credit, Bank Guarantee etc.) credit facilities up to Rs.100 lakh per eligible borrower are covered under the guarantee scheme provided they are extended purely on the project viability without collateral security or third party guarantee.
2. Can a credit facility of over Rs. 100 lakh be covered under the Scheme?
Yes, provided that the entire credit facility is extended without any collateral security and it is otherwise eligible for a guarantee cover under the Scheme. The guarantee cover available will be restricted to credit of Rs. 100 lakh even though credit extended is more than Rs. 100 lakh to an eligible borrower. In other words, maximum of credit risk borne by CGTMSE is restricted to Rs.62.50 lakh being 75% or Rs 65 lakh being 80% as the case may be.
3. Up to what extant CGTMSE provide guarantee cover for the credit facility extended by MLIs to eligible borrower?
CGTMSE provides guarantee cover up to 75% of the amount in default subject to a maximum of Rs.62.50 lakh.
However the extent of guarantee cover is 85%,under following case:
(a) Credit facilities up to Rs. 5 lakh extended to Micro Enterprises.
Also the extent of guarantee cover is 80%, subject to a maximum of Rs.65 lakh under following cases.
(a) For micro and small enterprises operated and/ or owned by women irrespective of amount
(b) Credit facilities to units in the North Eastern Region (including State of Sikkim) irrespective of amount.
4. What would be the guarantee / service fee that would be payable by the member-lending institution on credit facility sanctioned in excess of Rs. 100 lakh?
Presently, guarantee fee is payable @1.5% (0.75% in case of North Eastern Region including state of Sikkim) on the credit facility agreed to be covered by the Trust. In this case, maximum of Rs. 100 lakh would be extended guarantee cover even though the sanctioned amount exceeds Rs. 100 lakh. Similarly, the Annual service fee would be payable @0.75% on the guaranteed amount subject to a ceiling of Rs. 100 lakh.
5. Can term loan or working capital facility alone be extended by an eligible lender and still be covered under the guarantee scheme?
Yes, a lender can extend either term loan or working capital facility alone and still be eligible for a guarantee cover if it meets the other eligibility parameters. Needless to say, the credit facility extended to a borrower should be without any collateral security and/or third party guarantee.
6. Can a credit facility extended to a borrower against a collateral security be covered under the Guarantee Scheme, if the lending institution relinquishes its rights on the collateral security?
Yes, provided the lending institution relinquishes its rights on the collateral assets and releases the same in favour of the borrower before seeking guarantee cover and subject to fulfillment of the other norms of the Scheme.
Further, in case the MLIs has to retain the collateral security for the existing credit facility, a new credit facility extended to same borrower, with out taking collateral can be covered under the scheme provided, the MLI is not extending the charge on the existing collateral to new facility.
7. Is there any ceiling in respect of interest to be levied on the credit facility advanced to the borrower if the same is to be covered under the Scheme?
The lender has to follow the guidelines issued by RBI regarding charging of interest on the credit. However, the rate of interest shall not exceed 3% over and above Prime Lending Rate (PLR) of the lender. This is exclusive of the fee payable to the Trust.
8. Is it possible to cover credit facilities, which have already become NPA?
No, the credit facility that has already become NPA cannot be covered under the Scheme.