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Annual Guarantee Fee (AGF)

1. Whether the incidence of Annual Guarantee Fee be passed on by the lender to the borrower?

The discretion is left to the MLI.

2. Whether the rates of Annual Guarantee Fee can be varied after the commencement of guarantee cover?

Any change in the Annual Guarantee Fee will be intimated to MLI from time to time. Any change in rate will have only prospective effect on the future proposals to be covered under the Scheme. As regards to Fee charged annually, it is payable on the outstanding loan amount instead of guaranteed amount for credit facilities sanctioned / renewed to MSEs on or after April 01, 2018 as per Circular No.139.

3. Is service fee payable even after lodgement of claim?

Yes, Annual Service Fee/AGF is required to pay after lodgement of claim till settlement of first instalment of 75% of the guaranteed amount. However, no claim can be lodged before the expiry of the initial lock-in period (ie.18 months from the date of issue of the guarantee cover or the date of last disbursement, whichever is later).

4. What would be the Annual Guarantee Fee that would be payable by the member-lending institution on credit facility sanctioned in excess of 200 lakh?

The Annual Guarantee Fee payable would be on the outstanding loan amount instead of guaranteed amount for credit facilities sanctioned / renewed to MSEs on or after April 01, 2018 as per Circular No.139/2017-18.

5. How is the Annual Guarantee fee payable for the first year?

In the first year of coverage of each guaranteed unit, the Annual Guarantee Fee is calculated for 1yr. In the succeeding year, it is worked out on pro-rata basis i.e. at the applicable rate of fee charged for the period (no. of days) of outstanding, till March 31. For calculation of Annual Guarantee Fee, number of days in a year is taken as 365. For subsequent years, service fee is charged for the whole year on the outstanding loan amount instead of guaranteed amount for credit facilities sanctioned / renewed to MSEs on or after April 01, 2018 as per Circular No.139 except for terminal year or closed cases where it is on pro rata basis.

6. As per Circular 139, AGF will be charged on the outstanding loan amount. What will the AGF charges where there has been no disbursement (TL) or no ulitisation (WC) in the guaranteed account.

AGF will be charged on the guaranteed amount for the first year and on the outstanding amount for the remaining tenure of the credit facility for credit facilities sanctioned / renewed to MSEs on or after April 01, 2018. Fee will be generated on entire guaranteed/sanctioned amount where account is not opened/ there has been no disbursement/ no utilization of working capital Limit.

7. How fee is calculated in case of Term Loan where outstanding is updated for partial / undisbursed case?

In case where Outstanding is updated for partial / undisbursed Term Loan, Fee is calculated on Guarantee Amount.

8. How fee is calculated in case of Term Loan where outstanding is updated for Fully Disbursed case?

In case where Outstanding is updated for Fully Disbursed Term Loan, fee is calculated on Outstanding Amount or Guarantee Amount, whichever is lower.

9. How fee is calculated in case of Working Capital where peak outstanding has been updated?

In case of Working Capital where Peak Outstanding has been updated, fee is calculated on Peak Outstanding Amount or Guarantee Amount, whichever is lower.

10. How fee is calculated in case of Hybrid coverage of Term Loan where outstanding is updated for partial / undisbursed case?

In case of Hybrid coverage where Outstanding is updated for partial / undisbursed Term Loan, Fee is calculated on Guarantee Amount.

11. How fee is calculated in case of Hybrid coverage of Term Loan where outstanding is updated for Fully Disbursed case?

In case of Hybrid coverage where Outstanding is updated for Fully Disbursed Term Loan, fee is calculated on Derived Net Outstanding (Updated Outstanding Amount (minus) Collateral value) or Guarantee Amount, whichever is lower. In case where Derived Net Outstanding is 0 or less than 0, Guarantee for such term loans has been closed in the system.

12. How fee is calculated in case of Hybrid coverage of Working Capital where peak outstanding has been updated?

In case of Hybrid coverage where Peak Outstanding has been updated for Working Capital, fee is calculated on Derived Net Outstanding (Updated Outstanding Amount (minus) Collateral value) or Guarantee Amount, whichever is lower. In case where Derived Net Outstanding is 0 or less than 0, no fee has been generated for such guaranteed working capital accounts.

13. How fee is calculated where o/s is not updated or updated as 0 or 1?

In case where outstanding is not updated, fee will be calculated on guaranteed amount. As per the previous year’s Where outstanding is not updated for current year and updated as fully disbursed during previous year for term loan accounts, fee is calculated based on outstanding amount updated last year. Guarantees in respect of Term Loans with negligible outstanding amount, in case of fully disbursed cases, have been closed.

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