TMI BlogCredit Guarantee Scheme for Stand Up India (CGSSI)X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, or the date of lodgement of claim application whichever is lower or such of the date as may be specified by NCGTC for preferring any claim against the guarantee cover subject to a maximum of amount guaranteed as mentioned in point no.10. (iii) Base Rate for a lending institution means the Base Rate so declared by that lending institution from time to time as per Reserve Bank of India guidelines based on which interest rate applicable for the loan will be determined. (iv) Primary security 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 proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xv ) NCGTC means National Credit Guarantee Trustee Company set up on March 28, 2014 by Government of India under the Companies Act 1956 to act as the Trustee to operate various Credit Guarantee Funds, set up/to be set up by Government of India from time to time. Accordingly, all matters pertaining to the operations of CGSSI would be undertaken by NCGTC on behalf of the said Fund Trust. CHAPTER II SCOPE AND 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 referred by a lending institution which otherwise satisfies the norms of the Scheme. 5. Stand Up assistance eligible under the Scheme: The Trust shall cover assistance of over ₹ 10 lakh upto ₹ 100 lakh inclusive of working capital extended by el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Responsibilities of lending institution under the Scheme: (i) The lending institution shall evaluate Stand Up India credit facilities in accordance with the guidelines issued by Reserve Bank of India / the Fund and conduct the account(s) of the borrowers with normal lending prudence. (ii) The lending institution shall collate all its outstanding eligible Stand Up India credit facilities extended against sanctions effected on or after the date of Gazette notification as at the end of a quarter (quarter ended March, 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: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall, in particular, refrain from any act of omission or commission, either before or subsequent to invocation of guarantee, which may adversely affect the interest of the Fund as the guarantor. In particular, the lending institution should intimate NCGTC while entering into any compromise or arrangement, which may have effect 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 sanctioned in the quarter April-June, July-September, October-December and January- March prior to expiry of the following quarter viz. July-September, October-December, January-March and April-June respectively. All such sanctioned cases which have been disbursed (fully or partially) would only be eligible for applying for guarantee cover in quarterly batches ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 facility, and c) Annual guarantee fee not due. CHAPTER IV GUARANTEES 10. Extent of the guarantee The Fund shall provide guarantee cover to the extent of 80% of the amount in default for credit facility above ₹ 10 lakh and upto ₹ 50 lakh, subject to a maximum of ₹ 40 lakh. For credit facility above ₹ 50 lakh and upto ₹ 100 lakh - ₹ 40 lakh plus 50% of amount in default above ₹ 50 lakh subject to overall ceiling of ₹ 65 lakh of the amount in default. The Fund 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 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th penal interest at the rate of 4% above the prevailing Bank Rate, if such a recall is made by the Trust in the event of serious deficiencies having existed in the matter of appraisal / renewal / follow-up / conduct of the credit facility or 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 its efforts for recovery, realisations and such other information as may be demanded or required from time to time. The lending institution will hold lien on assets created out of the credit facility extended to the borrower, on its own behalf and on behalf of the Trust. The Trust shall not exercise any subrogation rights and that the responsibility of the recovery of dues including takeover of assets, sale of assets, etc., shall rest with the lend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 authority related to all the policy and operational matters of the Scheme. CHAPTER VII MISCELLANEOUS 13. Appropriation of amount realised by the lending institution in respect of a credit facility after the guarantee has been invoked. Where subsequent to the Fund having released a sum to the lending institution towards the amount in default in accordance with the provisions contained in this scheme, the lending institution recovers money subsequent to the recovery proceedings initiated by it, the 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch guarantee. (ii) The lending institution shall as far as possible ensure that the conditions of any contract relating to an account guaranteed 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 which such modification, cancellation or replacement comes into effect, shall not be affected. (ii) Notwithstanding anything herein contained, the Fund shall have a right to alter the terms and conditions of the Scheme in regard to an account in respect of which guarantee has not been issued / invoked as on the date of such alteration. (iii) In the event of the Scheme being cancelled, no claim shall lie against the Fund in respect of facilities covered by the Scheme, unless the provisions contained in the Scheme are complied with by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGTMSE as on September 30 of immediately preceding financial year would form the basis of calculation. The MLIs would be advised by January every year about their respective NPA percentage and claim pay-out ratio as per the CGTMSE records and the risk premium applicable to them. 5. As regards calculation of NPA percentages and claim pay-out ratio, it may be mentioned that while NPA percentage would be worked on the basis of cumulative NPAs upto September 30 each year as marked by the MLI in CGTMSE portal (net of upgraded accounts and the accounts where the claims would not hit CGTMSE in respect of the NPAs marked) in terms of amount (i.e. Guaranteed amount of the corresponding NPA account) vis- -vis the cumulative guarantees issued by the Trust as on September 30 every year as indicated above, the claim pay-out ratio would be worked out on the basis of cumulative claims settled by the Trust and the cumulative receipts (includes Guarantee and Annual Service /Annual Guarantee Fee receipts, recoveries out of OTS and recoveries passed on by MLIs after first settlement of claim) as on September 30 each year. The cumulative claims paid upto 1.05 times of the cumulative receipts will n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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