CGTMSE stands for Credit Guarantee fund for Micro and Small enterprises. CGTMSE was introduced by the government to boost entrepreneurship ventures in India and boost new / existing MSE units in India. Any individual, company under proprietorship / partnership can apply for CGTMSE guarantee cover for all eligible sectors under the scheme upto a maximum of Rs. 1.00 crore.
What are Micro And Small Enterprises.
In Manufacturing Sector:
Micro Industries: Industries with a total turnover of Rs25 Lac or Less are regarded as Micro Industries in Manufacturing Sector
Small Industries: Industries with a total turnover above Rs.25 Lacs to a maximum of Rs 5 Crores are regarded as small Industries in Manufacturing Sector.
In Service Sector:
Micro Industries: Industries with a total turnover of Rs.10 Lac or less are regarded as Micro Industries in Service Sector.
Small Enterprises: Industries with a total turnover of Above Rs 10Lac to a Maximum of 2 crores is regarded as Small Industries in Service Sector
What are the rules of CGTMSE:
Maximum amount that can be covered under CGTMSE guarantee is Rs. 1 crore
You are not allowed to take any collateral from the borrower if the loan covered under CGTMSE
All manufacturing and Service sector units can be covered under CGTMSE.
If you are covering an existing unit under CGTMSE from whom collateral has been taken, you 1st need to retum the collateral to the customer.
To cover a loan under CGTMSE guarantee the fee payable for registration is 1.5% of the loan followed by renewal at .75% every year in month of May.
What are the conditions to get claim under CGTMSE
The loan has not turned NPA before 18 months from the last date of Disbursement or Date of Guarantee fee which ever is later
No other collateral is taken in the loan
Renewal is done every year.
If loan is of time period of more than 5 years then extension of guarantee cover needs to be taken.
What Claim we get If loan goes bad Under CGTMSE
If a loan which is covered under CGTMSE goes bad, Bank is eligible for complete guarantee cover in 2 installments.
If advance amount is not more than 4 Lacs or borrower is a women, then loan is eligible for 1st installement of 85%
If advance amount is above 4 Lacs but below 50 Lacs then loan is eligible for 1st installemnent of 75% of guarantee cover to a maximum of 35 Lacs
if advance amount of Above Rs 50 Lacs then loan is eligible for 1st installment of Rs 35Lac + 50% of rest amount to a maximum of Rs 62.5 lacs
Condition of CGTMSE:
Bank is eligible for 1st installement only after legal action has been taken against the borrower. (Legal action can be lok adalat, RRC etc)
If the loan has become an NPA, it is mandatory to make it a NPA with CGTMSE before end of next Quarter.
If CGTMSE has paid you the 1st installment under guarantee, CGTMSE is eligible to be informed and re-credited with whatever recovery which is done by the bank in the respective account.