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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 Annual Guarantee Fee is charged for NPA Accounts?

Yes, Annual Guarantee Fee (AGF) is charged till Application expiry date( Completion of tenure of loan) or Claim settlement year, whichever is earlier.

4. 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).

5. 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.

6. 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.

7. 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.

In case of Working Capital, Expected Maximum Outstanding may be updated for calculation of fee amount and in case of undisbursed / partially disbursed Term Loan, fee shall be genrated on Guarantee amount.

8. 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.

9. 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 Principle Outstanding Amount (or Derived Outstanding in case of Hybrid Model.)

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?

Fee is calculated on derived outstanding by netting off collateral value from the outstanding as provided by MLI. Derived outstanding for fee generation = Actual principle outstanding as on 31st  December less collateral value as mentioned at the time of guarantee coverage.

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

In case where outstanding is not updated , Fee shall be charged on last year's outstanding/ Guarantee Amount. Guarantees in respect of Term Loans (in case of fully disbursed cases)/ Working Capital with negligible outstanding amount, account will be closed.

For Additional queries on AGF, you may also refer to Circular 190/ 2021-22 issued  on January 03, 2022  available on CGTMSE website for more clarity.

13. How would the MLI know the applicable risk premium/discount as mentioned in Circular No 208. Is it available in portal?

The Report on Applicable Risk Premium to MLI is made available in CGTMSE system. Use following path to know the detail: Visit CGTMSE login >> Reports and MIS >> Risk Premium Reports >> wef 01 Dec 2022.

14.As per Circular 208, in case the MLI falls under the category say ‘Standard Rate plus Risk Premium of 15% on Standard Rate’, what would be the fee rate for a guarantee of ₹10 lakh?

In case MLI fall under the category of ‘Standard Rate plus Risk Premium of 15% on Standard Rate’, the applicable fee rate for a guarantee coverage of ₹10 lakh would be 0.86%

15.As per Circular 208, in case the MLI falls under the category say ‘Standard Rate plus Risk Premium of 15% on Standard Rate’, what would be the fee rate for a guarantee coverage of credit facility of ₹10 lakh where the unit is having an existing credit facility already covered for ₹20 lakh under CGTMSE?

In case MLI fall under the category of ‘Standard Rate plus Risk Premium of 15% on Standard Rate’, considering the total exposure of `₹30 lakh, the applicable fee rate for a guarantee coverage of ₹10 lakh would be 1.27%

16.As per Circular 208, in case the MLI fall under the category say ‘Standard Rate with discount of 10% on Standard Rate’, what would be the fee rate for a guarantee of ₹10 lakh?

In case MLI fall under the category of ‘Standard Rate with discount of 10% on Standard Rate’, the applicable fee rate for a guarantee coverage of ₹10 lakh would be 0.68%

17.As per Circular 208, in case the MLI fall under the category ‘Standard Rate plus Risk Premium of 15% on Standard Rate’, what would be the fee rate for Women Entrepreneur for a guarantee of `10 lakh? How it is calculated?

The applicable fee rate for a guarantee coverage of `10 lakh would be 0.78%. The detailed Calculation is as follows

 

Particulars

Rate

Guarantee Amount

10 lakh

Standard Rate (SR)

0.75%

MLI’s Risk rating

Standard Rate plus Risk Premium of 15% on Standard Rate

Addiotional Concession to Special Category – Women Entrepreneur

10%

Applicable Fee:
Standard rate: 0.75
10% concession on SR: 0.68
Risk Premium 15% on 0.68: 0.78

0.78%

 

18.As per Circular 208, in case the MLI fall under the category ‘Standard Rate plus Risk Premium of 50% on Standard Rate’, what would be the fee rate for Unit located in Aspirational District & ZED certified Unit for a guarantee of `10 lakh? How it is calculated?

The applicable fee rate for a guarantee coverage of `10 lakh would be 0.90%. The detailed Calculation is as follows

 

Particulars

Rate

Guarantee Amount

10 lakh

Standard Rate (SR)

0.75%

MLI’s Risk rating

Standard Rate plus Risk Premium of 50% on Standard Rate

Addiotional Concession to Special Category – Aspirational District & ZED certified Unit

20%

Applicable Fee:
Standard rate: 0.75
20% concession on SR: 0.60
Risk Premium 50% on 0.68: 0.90

0.90%

 

19. As per Circular 208, in case the MLI fall under the category ‘Standard Rate plus Risk Premium of 30% on Standard Rate’, what would be the fee rate for Unit located in Aspirational District, SC/ST Entrepreneur & ZED certified Unit for a guarantee of `10 lakh? How it is calculated?

The applicable fee rate for a guarantee coverage of `10 lakh would be 0.90%. The detailed Calculation is as follows

 

Particulars

Rate

Guarantee Amount

10 lakh

Standard Rate (SR)

0.75%

MLI’s Risk rating

Standard Rate plus Risk Premium of 50% on Standard Rate

Addiotional Concession to Special Category – Unit located in Aspirational District, SC/ST Entrepreneur & ZED certified Unit

30%

Applicable Fee:
Standard rate: 0.75
30% concession on SR: 0.52
Risk Premium 50% on 0.68: 0.68

0.68%

 

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