Andhra Bank
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Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
 
CGTMSE(Credit Guarantee fund Trust for Micro and Small Enterprises) is setup by GoI, & SIDBI in Aug’2000 to make collateral free credit facilities available to MSEs(Micro & Small Enterprises).
As per loan policy guidelines of our bank, for all the credit facilities upto Rs 10 lakh sanctioned for MSE borrowers, it is mandatory that no collateral security shall be accepted and all such credit facilities must be covered under CGTMSE.
As per RBI guidelines, MSE advances guaranteed by CGTMSE will attract zero risk weight for the guaranteed portion and no provision is to be made for the guaranteed portion in case the advances covered under CGTMSE, becomes NPA. 
 
  Eligibility
Under CGTMSE, guarantee cover is provided by the trust for the credit facilities to an extent of Rs 100 lakh that have been sanctioned without any collateral security and/or third party guarantees to all new and existing Micro and Small Enterprises (both Mfg as well as services) except Retail Trade. 
 
Credit facilities sanctioned to an eligible borrower with rate of interest more than 4% over Base Rate are not eligible to cover under CGTMSE [Ceiling with regard to interest rate linked to MCLR is yet to be communicated by CGTMSE]. Further, loans sanctioned under Agriculture segment and SHGs are also not eligible to cover under CGTMSE. 
  Extent of Guarantee
The extent of guarantee provided by the trust is based on the category of the borrowers/location of the unit and amount of credit facility being covered under guarantee. The same is as under:
 
Borrower Category Maximum extent of guarantee where credit facility is
Upto Rs.5 lakh Above Rs.5 lakh
upto Rs.50 lakh
Above Rs.50 lakh
upto Rs.100 lakh
Micro Enterprises * 85% of the Amount in Default subject to a maximum of
Rs.4.25 lakh
75% of the Amount in Default subject to a maximum of  Rs.37.50 lakh 50 % of the amount in default subject to a maximum of Rs. 50 lakhs.
Women Entrepreneurs / Units located in North East Region (incl. Sikkim) (Other than credit facility upto Rs.5 lakh to micro enterprises) 80% of the amount in Default subject to a maximum
of Rs.40 lakh
50 % of the amount in default subject to a maximum of Rs. 50 lakhs.
 
All other category of borrowers 75% of the amount in Default subject to a maximum
of Rs.37.50 lakh
50 % of the amount in default subject to a maximum of Rs. 50 lakhs.
 

 

* As per MSMED Act 2006, a Micro Enterprise(Mfg) is defined as a unit engaged in manufacturing/production/preservation of goods with investment in plant and machinery upto Rs 25 lakh and Micro Enterprise(Service) is defined as a unit engaged in providing/rendering of services with investment in equipment upto Rs 10 lakh.

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 (incl. interest) as on the date of account becoming NPA or the date of lodgment of claim application whichever is lower subject to a maximum of amount guaranteed.