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 500 lakh per eligible borrower are covered under the guarantee scheme provided they are extended on the project viability without collateral security or third party guarantee. However, under the "Hybrid Security" product, the MLIs will be allowed to obtain collateral security for a part of the credit facility, whereas the remaining part of the credit facility, up to a maximum of 500 lakh, can be covered under Credit Guarantee Scheme of CGTMSE.

2.  Can a credit facility of over  500 lakh be covered under the Scheme?

Yes, the guarantee cover available will be restricted to credit of 500 lakh even though credit extended is more than 500 lakh to an eligible borrower. In other words, maximum of credit risk borne by CGTMSE is restricted to 375 lakh i.e. 75% of amount in default.

3. What would be the guarantee / service fee that would be payable by the member-lending institution on credit facility sanctioned in excess of  ₹500 lakh?

AGF would be charged on the outstanding loan amount instead of guaranteed amount for credit facilities sanctioned / renewed to MSEs on or after April 01, 2023. Please refer to Circular No. 221/2022-23 dated March 31, 2023 available in the website for Annual Guarantee Fee Structure.

4. 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.

5. 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. Also, under ‘Hybrid Security’ product, MLIs is allowed to obtain collateral security for a part of the credit facility, whereas the remaining part of the credit facility, up to a maximum of ₹500 lakh, can be covered under Credit Guarantee Scheme of CGTMSE.

6. 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?

No. Any credit facility which has been sanctioned by the eligible MLI with the interest rate charged as per the RBI guidelines would be eligible for coverage under CGS -I

7. 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.

8. As per Circular No 210, Retail/wholesale Trade is aligned with other activities in respect to fee, ceiling limit & extent of coverage. In this regard, whether existing Working Capital account of MSE Trading covered under CGTMSE is eligible for enhancement upto ₹500 lakh?

Yes, the revised ceiling limit of ₹500 lakh is also applicable to existing Working Capital covered under CGTMSE. Such WC account can be enhanced upto ₹500 lakh.