Credit Guarantee Fund Trust for

Small Industries
CGTSI/(44)/

November 01,2006

All Member Lending Institutions of CGTSI
Circular No. 33 / 2006-07

Dear Sir,
Life Insurance cover for Chief Promoter of units with guarantee cover under CGS

Pursuant to the announcement made by the Hon’ble Finance Minister, Govt. of India, in
the Parliament on February 28, 2006 while presenting Union Budget for FY2006-07, it has been
decided to provide life insurance cover of Rs. 2,00,000/- (Rs. two lakh only) for every Chief
Promoter of the units provided guarantee cover under the Credit Guarantee Scheme(CGS) of
CGTSI, as per the terms and conditions mentioned below:
1. The Assurance shall be effective on the life of each member (i.e. Chief Promoter) under the
group term insurance scheme of Life Insurance Corporation of India (LIC), for a sum assured
of Rs. 2,00,000, irrespective of the amount of credit facility actually covered under CGS. This
measure is extended by CGTSI as a purely welfare measure without entailing any contractual
liability vis-à-vis the member. In case of non-coverage of a member’s life, inadvertently or
otherwise or due to any technical/reconciliation issues, or non-settlement of claims, CGTSI
will not be liable in any manner whatsoever.
2. The Assurances shall be held by CGTSI UPON TRUST for the benefit of the persons entitled to
the benefit.
3.

CGTSI shall pay to the LIC in respect of each member on the Entry Date and relevant
Annual Renewal Dates, or intervening convenient date, in a consolidated manner, such
contribution (premium) as are required to secure and continue the Assurance on his life. The
‘Entry Date’ for the present policy is August 01,2006.

4. The LIC has issued a Single Master Policy to CGTSI under the Scheme after due payment of
the premium on August 7, 2006 covering the list of Chief promoters as on July 31, 2006 and
the risk cover will accordingly commence from August 7, 2006. Kindly note that Chief
Promoters of borrowing units covered under CGS, after that date, will not be covered under
this Insurance Policy (Scheme), until CGTSI remits the premium at the next ’Annual Renewal
Date’ or any intervening date between the ‘Entry Date’ and the ’Annual Renewal Date’
5. CGTSI will act for and on behalf of the Members through the MLIs in all matters relating to

The benefits assured under the Scheme are strictly personal and cannot be assigned. CGTSI reserves the right to discontinue the Scheme at any time or amend the Rules thereof. 6. member may appoint any person (not being a minor) to receive the amount. Every member (Chief Promoter) shall nominate any person/s to whom. and the member/Chief Promoter has not attained 60 years of age. 11. are being covered under the Scheme.the Scheme and every act done by. Responsibilities of the MLI 1. 8. Chief Promoter of units which have been covered under the Credit Guarantee Scheme of CGTSI and who are aged not less than 18 years and not more than 59 years i. This payment will be subject to para 9 given below. 01/04/2007. 2. in case the loan stands fully repaid in between two Annual Renewal Dates of the policy. At the stage of Death Claim. 7. 10. less than 60 years completed.e. a duly verified and authenticated copy of the Age Proof on the basis of which the date of birth of the member was recorded at the time of the entry of the member into the scheme. Provided further that nothing contained herein shall affect any claim which any representative/ heir of the deceased member may have against the nominee in respect of any amount payable under the policy. This will be made a mandatory data field in the application form w. the MLI shall submit.f. MLIs are requested to take advance steps for sensitising their branch offices well in time about this aspect. CGTSI shall deduct the amount payable towards meeting its liability (Guaranteed amount in default) and balance if any shall be paid to the nominee of the deceased. . Upon the death of the Member prior to Terminal Date. Any payment to nominee shall be a full discharge of CGTSI/LIC liability in respect of such policy. charged or alienated in any way. For the existing cases and cases for which application for guarantee cover is lodged upto 31/03/2007. 9.e. the Sum assured under the Assurance then in force shall be payable to CGTSI for the benefit of the Beneficiary. The MLI should ensure that the date of birth is accurately stated in the application form at the time of lodging the application. the amount released by LIC may be paid. In case the nominee being minor. agreement made with and notice given to the LIC by the CGTSI shall be binding on the Members. in the event of the death of the member. along with the Death Claim Form (Annexure II) and the Death Certificate. the MLIs are required to provide a list of Chief promoters of the covered units along with their dates of birth and nominees as per the format provided in Annexure I at the earliest. The life cover of a member (Chief Promoter) shall continue upto the date of the next Annual Renewal date. as also any other document that may be required by LIC. The claim must be lodged by the MLI with CGTSI within 30 days of the death of the member (Chief Promoter).

. Yours faithfully.3.Radhakrishnan) Deputy General Manager . Sd/(P. CGTSI will lodge the claims with LIC on the basis of signed/authenticated documents presented by the controlling offices of the MLIs.M.