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Credit Guarantee Scheme for Stand Up India (CGSSI)

Allied Laws - F. No. 28/05/2016-CP/IF-II - Dated:- 25-4-2016 - MINISTRY OF FINANCE (Department of Financial Services) NOTIFICATION New Delhi, the 25th April, 2016 S.O. 1499(E).-In pursuance of the approval of the Cabinet vide its minutes of the meeting dated 6th January, 2016, the Central Government hereby makes the following scheme for the purpose of providing guarantees to loans extended under Stand Up India Scheme. CHAPTER I INTRODUCTION Title and date of commencement (i) The Scheme shall be .....

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any case, be more than 3% p.a. over the Base Rate + tenor premium, if any, for the loan . 2. Definitions For the purposes of this Scheme - (i) Stand Up India Scheme is the lending scheme as formulated and approved by Government of India. (ii) "Amount in Default" means the principal and interest amount outstanding in the account(s) of the borrower in respect of term loan and amount of outstanding working capital facilities (including interest), as on the date of the account becoming NPA .....

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in respect of a credit facility shall mean the assets created out of the credit facility so extended and/or existing unencumbered assets which are directly associated with the project or business for which the credit facility has been extended. (v) "Collateral security" means the security provided in addition to primary security / personal obligation of borrower/co-borrower. (vi) "Eligible borrower" means Scheduled Castes (SC), Scheduled Tribes (ST) and Women entrepreneurs, .....

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d enterprises; extended by the eligible lending institution. (viii) Guarantee Cover means maximum cover available per eligible borrower of the amount in default in respect of the credit facility extended by the lending institution. (ix) "Eligible Lending institution(s)"means Scheduled Commercial Banks who meets eligibility criteria prescribed by the Fund and whose credit requirement does not exceed the specified limit. Specified limit of the assistance shall be above ₹ 10 lakh &a .....

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xtended by the eligible lending institution to the eligible borrower. (xii) "Non Performing Assets" means an asset classified as a non-performing asset based on the instructions and guidelines issued by the Reserve Bank of India from time to time. (xiii) "Scheme" means the Credit Guarantee Scheme for Stand Up India. (xiv) Lock-in-period means the period during which no invocation of guarantee can be made. A lock-in-period of 18 months has been stipulated from the date of comm .....

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D EXTENT OF THE SCHEME 4. Guarantees by the Fund (i) Subject to the other provisions of the Scheme, the Fund undertakes, in relation to the credit facilities extended to an eligible borrower by an eligible lending institution which has entered into the necessary agreement for this purpose with the Fund, to provide guarantee against default in repayment of Stand Up India credit facilities extended by the lending institutions. (ii) The Fund reserves the discretion to accept or reject any proposal .....

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Provided that, as on the material date, (i) The dues to the lending institution have not become bad or doubtful of recovery; and / or (ii) The business or activity of the borrower for which the credit facility was granted has not ceased; and / or (iii) The credit facility has not wholly or partly been utilised for adjustment of any debts deemed bad or doubtful of recovery, without obtaining a prior consent in this regard from the Trust. 6. Stand Up India Assistance not eligible under the Scheme .....

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ing on the business of insurance, guarantee or indemnity, to the extent they are so covered. (iii) Any credit facilities, which does not conform to, or is in any way inconsistent with, the provisions of any law, or with any directives or instructions issued by the Central Government or the Reserve Bank of India, which may, for the time being, be in force. (iv) Any Credit facilities granted to any borrower, who has availed of any other composite loan covered under this Scheme or under the schemes .....

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institution against collateral security and / or third party guarantee. (vi) Any credit facility which has been sanctioned by the lending institution which is not conforming to the Stand Up India Scheme. 7. Agreement to be executed by the lending institution A lending institution shall not be entitled to a guarantee in respect of eligible Stand Up India credit facilities granted by it unless it has entered into an agreement with NCGTC in such form as may be required by NCGTC. 8. Responsibilitie .....

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rch, June, September and December) into a batch and ensure to submit the information required by NCGTC for giving guarantee cover with regard to the Stand Up India borrowal account. (iii) The MLI would need to furnish a Management Certificate [as mentioned in point 9 (ii)] certifying the following: (a) All accounts in the quarterly batch conform to the Stand Up India Scheme and such credit facilities were sanctioned on or after the date of Gazette notification. (b) All accounts covered in the in .....

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egister the borrower s/co-borrower s name with an appropriate credit information bureau. (vi) The lending institution shall ensure that the guarantee claim in respect of the Stand Up India credit facility given to the borrower is lodged with NCGTC in form and manner and within such time as may be specified by NCGTC in this regard and that there shall not be any delay on its part to notify the default in the borrowers account which shall result in the Fund facing higher guarantee claims. (vii) Th .....

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ng such action as may be advised by NCGTC. (viii) The lending institution shall comply with such directions as may be issued by NCGTC, from time to time, for facilitating recoveries in the guaranteed account, or safeguarding its interest as a credit guarantor, as NCGTC may deem fit and the lending institution shall be bound to comply with such directions. (ix) The lending institution shall, in respect of any guaranteed account, exercise the same diligence in recovering the dues, and safeguarding .....

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ct of discharge or waiver of personal guarantee(s) or primary security. Further, the lending institution shall secure for the Fund or its appointed agency, through a stipulation in an agreement with the borrower or otherwise, the right to publish the defaulted borrowers' names and particulars NCGTC. CHAPTER III GUARANTEE FEE STRUCTURE 9. Guarantee Fee (i) For availing the guarantee coverage, the Member Lending Institution shall apply for guarantee cover in respect of credit proposals sanctio .....

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all be paid on pro-rata basis for the first and last year and in full for the intervening years on the credit facility sanctioned (comprising term loan and / or working capital facility) within 16 days* from the end of the quarter in which the credit facility was sanctioned (subject to parameters prescribed at para no.(i) above) or renewed. *The MLI would need to furnish a Management Certificate within 10 days from the end of the quarter, after which, a Credit Guarantee Demand Advice Note [CGDAN .....

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of claim for such accounts. (v) Provided further that in the event of non-payment of Guarantee Fee within the stipulated time or such extended time that may be agreed to by NCGTC on such terms, liability of the Fund to guarantee such credit facility would lapse in respect of those credit facilities against which the Guarantee Fee are due and not paid, (vi) In the event of any error or discrepancy or shortfall being found in the computation of the amounts or in the calculation of the guarantee fe .....

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ecision of NCGTC shall be final and binding on the lending institution. (vii) The amount equivalent to the guarantee fee payable by the Member Lending Institution may be recovered by it, in full or in part, based on the agreement between the lender and the borrower (viii) The guarantee fee once paid by the lending institution to NCGTC is non-refundable, except under certain circumstances like - a) Excess remittance, b) Remittance made more than once against the same Stand Up India credit facilit .....

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nd reserves the right to modify the same. The guarantee cover will commence from the date of payment of guarantee fee and shall run through the agreed tenure of the Stand Up India credit facilities. CHAPTER V CLAIMS 11. Invocation of guarantee (i) The lending institution may invoke the guarantee in respect of Stand Up India credit facilities within a maximum period of two years from the date of NPA, if NPA is after lock-in period or within two years of lockin period, if NPA is within lock-in per .....

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Provided that the lending institution shall not make or be entitled to make any claim on the Fund in respect of the said Stand Up India credit facility, if the loss in respect of the said credit facility had occurred owing to actions / decisions taken contrary to or in contravention of the guidelines issued by the Fund. d. The Stand Up India credit facilities has been recalled and the recovery proceedings have been initiated under due process of law against the borrower(s) / co-borrower(s). (ii) .....

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beyond 30 days. The balance 25 per cent of the guaranteed amount will be paid on conclusion of recovery proceedings by the lending institution. On a claim being paid, the Trust shall be deemed to have been discharged from all its liabilities on account of the guarantee in force in respect of the borrower concerned. (iv) In the event of default the lending institution shall exercise its rights, if any, to takeover the assets of the borrowers and the amount realised, if any, from the sale of such .....

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r where lodgement of the claim was more than once or where there existed suppression of any material information on part of the lending institutions for the settlement of claims. The lending institution shall pay such penal interest, when demanded by the Trust, from the date of the initial release of the claim by the Trust to the date of refund of the claim. 12. Subrogation of rights and recoveries on account of claims paid (i) The lending institution shall furnish to the Trust, the details of i .....

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owing several distinct and separate debts to the lending institution and making payments towards any one or more of the same, whether the account towards which the payment is made is covered by the guarantee of the Trust or not, such payments shall, for the purpose of this clause, be deemed to have been appropriated by the lending institution to the debt covered by the guarantee and in respect of which a claim has been preferred and paid, irrespective of the manner of appropriation indicated by .....

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HAPTER VI MANAGEMENT Constitution The Fund shall have a Management Committee to be appointed by the Settlor of the Fund consisting of Secretary, DFS as the ex-officio Chairperson; Chairman and Managing Director of SIDBI, Chairman of Indian Banks Association; and Chief Executive Officer, NCGTC as Member Secretary . A member appointed as above in his/her ex-officio capacity shall remain as a member only as long as he/she holds that office and upon his/her vacating that office, his/her successor sh .....

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becomes incompetent or incapable to act, as Member. A co-opted member may retire at any time after giving seven days notice in writing to the Government and unless he is the Chairperson of the Management Committee, a copy of the notice shall also be sent to Chairperson. Functions of Management Committee (MC) The M.C. will be responsible for reviewing the Scheme and providing necessary guidance to the Board of NCGTC on the matters related to the Fund. The Board of NCGTC would be the competent au .....

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same shall be deposited by the lending institution with the Fund, after adjusting towards the legal costs incurred by it for recovery of the amount. 14. Fund's liability to be terminated in certain cases (i) If the liabilities of a borrower to the lending institution on account of credit facility guaranteed under this Scheme are transferred or assigned to any other borrower and if the conditions as to the eligibility of the borrower, the amount of the credit facility and any other terms and .....

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ed to the liability of the borrower to the lending institution as on the date on which the borrower becomes so ineligible, subject, however, to the limits on the liability of the Fund fixed under this Scheme. 15. Returns and Inspections The lending institution shall submit such statements and furnish such information as the Fund may require in connection with guarantee under this Scheme. (i) The lending institution shall also furnish to NCGTC all such documents, receipts, certificates and other .....

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book of instructions or manual or circulars covering general instructions regarding conduct of advances) of the lending institution, and of any borrower from the lending institution. Such inspection may be carried out through the officers of the Fund or any other person appointed by the Fund for the purpose of inspection. Every officer or other employee of the lending institution or the borrower, who is in a position to do so, shall make available to the officers of the Fund or the person appoi .....

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d under the Scheme are not in conflict with the provisions of the Scheme but notwithstanding any provision in any other document or contract, the lending institution shall in relation to the Fund be bound by the conditions imposed under the Scheme. 17. Modifications and exemptions (i) The Fund reserves to itself the right to modify, cancel or replace the scheme so, however, that the rights or obligations arising out of, or accruing under a guarantee issued under the Scheme up to the date on whic .....

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in the Scheme are complied with by the lending institution prior to the date on which the cancellation comes into force. 18. Interpretation If any question arises in regard to the interpretation of any of the provisions of the Scheme or of any directions or instructions or clarifications given in connection therewith, the decision of the Fund shall be final. 19. Supplementary and general provisions In respect of any matter not specifically provided for in this Scheme, the Fund may make such supp .....

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m on Claim Payout Ratio NPA Percentage Risk Premium Claim Payout Percentage Risk Premium 0-5% SR 0-5% SR >5-10% 10% of SR >5-10% 10% of SR >10-15% 15% of SR >10-15% 15% of SR >15-20% 20% of SR >15-20% 20% of SR >20% 25% of SR >20% 25% of SR The above Risk premium structure would be governed by the following: 1. The rates under this mechanism will be floating and will undergo changes every year based on the NPA level and payout ratios of the concerned Bank. 2. The MLIs hav .....

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