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MSME ADVANCES

Financing for Micro Industries, Small Industries, Tiny Industries, Small Scale Industries, Small
Scale Service & Business Enterprises (SSSBE- industry related) and Medium Enterprises are
defined as MSME Advances
1.GIST OF MSME POLICY OF THE BANK




















MSME Sector – Micro, Small and Medium Enterprises Sector defined as per MSMED
Act 2006.
Medium Enterprises defined for the first time
Micro and Small Enterprises Sector include Road & Water Transport Operators, Small
Business, Retail Trade, Professional and Self Employed & other Service Sector
Enterprises.
Items to be included & excluded while calculating Original investment in Plant &
Machinery is defined.
Provisions of Memorandum of Micro & Small Enterprises explained.
Mandatory target for lending to Micro & Small Enterprises stipulated. 10% annual growth
in Micro Number of Accounts, 20% growth in Micro & Small Enterprises outstanding and
Micro Enterprises share constitute 60% of total outstanding under MSE as at March of
previous year.
Classification of finance to MSME Sector defined.
MSME Wing in HO is established for focused attention to MSME related matters.
Exclusive SME Sulabhs for centralized processing of credit proposals emanating from
branches/clients are established at various Centres.
Bank has established Specialized SME branches for focused attention to MSMEs (both
existing and prospective clients).
Bank has identified branches which have substantial exposure to MSME sector as SME
Focus Branches and SME Designated branches, for increasing credit exposure to
MSME sector.
Simplified application forms (irrespective of amount) are devised for Micro and Small
Enterprises.
Online system of submission of application by MSMEs with tracking facility is
introduced.
Time Norms for disposal of Loan applications in tune with RBI and BCSBI guidelines
stipulated.
Guidelines with regard to rejection of MSME applications put in place.
No collateral security and/or third party guarantee to betaken for loans upto Rs.10 lakhs
to Micro & Small Enterprises and coverage of all such eligible loans under Credit
Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) is made mandatory.
Covering of all eligible collateral security and/or third party guarantee free loans Upto
Rs.100 Lakhs under Credit Guarantee Fund Scheme for Micro and Small Enterprises
(CGMSE).
Scheme of SME Debt Restructuring and Scheme of Rehabilitation of SICK Micro and
Small Enterprises as per RBI guidelines are put in place.
Rate of interest on loans and service charges to MSMEs are streamlined.
Concession in rate of interest and service charges etc are also extended depending on
merits.
Takeover norms for MSME accounts described
Cluster based approach to lending defined. Area/Cluster specific schemes are
introduced giving due consideration to the potential for the benefit of MSMEs.
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Code of Bank‟s commitment to Micro & Small enterprises under BCSBI defined.

2. DEFINITION OF MSME:
Industries
Services
The investment in plant and
The investment in equipment
machinery (original cost) does not
(original cost) does not exceed
exceed Rs.25 lakhs.
Rs.10 lakhs.
Small
Investment in plant and machinery
The investment in equipment
Enterprises
(original cost) is more than Rs.25
(original cost) is more than
lakhs but does not exceed Rs.500
Rs.10 lakhs but does not
lakhs.
exceed Rs.200 lakhs.
Medium
Investment in plant and machinery
The investment in equipment
Enterprises
(original cost) is more than Rs.500
(original cost) is more than
lakhs but does not exceed Rs.1000
Rs.200 lakhs but does not
lakhs.
exceed Rs.500 lakhs.
* Khadi and Village Industries Sector (KVI) - All advances granted to units in the KVI
sector, irrespective of their size of operations, location and amount of original investment
in Plant & Machinery / equipments to be considered as advances extended to Micro
Enterprises sector.
Micro
Enterprises *




Credit facilities extended to Micro & Small Industries to be classified as Priority
sector.
Credit facilities extended to Medium Enterprises to be classified as Non-Priority
sector
Lending to NBFCs and other intermediaries for onward lending to ME Sector may be
classified under ME Sector and such Advances are to be reported under Non-Priority
Sector.
Obtaining Memorandum for MSME is not mandatory for MSE and mandatory for
Medium industries.

3. INDIRECT FINANCE TO MSME:
-

Persons involved in assisting the decentralized sector in the supply of inputs to and
marketing of outputs of artisans, village and cottage industries.
Advances to co-operatives of producers in the decentralized sector viz. artisans, village
and cottage industries.
Bank credit to Micro Finance institutions (MFI) extended on or after 01.04.2011 for
onlending to individuals and also to members of Self Help Groups (SHGs)/ Joint Liability
Groups (JLGs) under Micro and Small Enterprises (Manufacturing as well as Services)
subject to compliance of guidelines specified here below.
a) Margin cap at 12% for all MFIs. The interest cost is to be calculated on average
fortnightly balances of outstanding borrowings and interest income is to be calculated
on average fortnightly balances of outstanding loan portfolio of qualifying assets.
b) Interest cap on individual loans at 26% per annum for all MFIs to be calculated on a
reducing balance basis.
c) Only three components are to be included in pricing of loans viz.,
a processing fee not exceeding 1% of the gross loan amount, the interest
charge andthe insurance premium.
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d) The processing fee is not to be included in the margin cap or the interest cap of 26%.
e) Only the actual cost of insurance i.e. actual cost of group insurance for life, health
and livestock for borrower and spouse can be recovered; administrative charges may
be recovered as per IRDA guidelines.
f) There should not be any penalty for delayed payment
g) No Security Deposit / Margin are to be taken
Loans granted by banks to NBFCs for on-lending to Small and Micro Enterprises.

4. CLASSIFICATION OF MSME ADVANCES:
-

Micro and small – mfg/service including retail trade enterprises to be classified as
Priority sector.
Export credit to MSE units – Priority sector.
Medium enterprises to be classified as Non priority sector.

5. TARGETS FOR LENDING TO MSMEs (HO Cir 469/2013)
Priority sector advances (which include the micro and small enterprises (MSE) sector)
constitute 40 per cent of Adjusted Net Bank Credit (ANBC) or credit equivalent amount
of Off-Balance Sheet Exposure, whichever is higher.
a. Achieve a 20 % growth over the outstanding MSE of previous financial year closure in
credit to Micro and Small Enterprises
b. Achieve 10 % annual growth in the number of Micro Enterprise accounts.
c. In order to ensure that sufficient credit is available to Micro Enterprises within the Micro
and Small Enterprises sector, branches/offices should ensure that share of Micro
Enterprises in total lending to Micro and Small Enterprises sector is as under:
Out of total advances to Micro and Small Enterprises:
40% of the total advances Micro (Manufacturing) Enterprises having investment in
to
Micro
and
Small plant and machinery up to Rs.10 lakhs and Micro
Enterprises sector should (Service) Enterprises having investment in equipment
go to:
up to Rs.4 lakhs
20% of the total advances Micro (Manufacturing) Enterprises with investment in
to
Micro
and
Small plant and machinery above Rs.10 lakhs and up to
Enterprises sector should Rs.25 lakhs, and Micro (Service) Enterprises with
go to:
investment in equipment above Rs.4 lakhs and up to
Rs.10 lakhs
Thus, 60% of Micro and Small Enterprises advances as at the end of March of
previous year should go to the Micro Enterprises.

6. TIME NORMS FOR DISPOSAL OF SME PROPOSALS: (HO Cir 48/2014)
Loan amount
Up to Rs 25000/-

Category
borrower

of

Micro & Small
Medium

Beyond Rs 25000/- Micro & Small

Sanctions at
Branch
2 Weeks

Circle office
Head office
Not applicable

2 Weeks
2 Weeks

2 Weeks

2 Weeks

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10 Lakhs coverage under CGMSE is mandatory (subject to exclusions noted here below).  8. Upto Rs. The agreement between seller and buyer shall not exceed more than 45 days. on the date agreed on. - Loans to Micro & Small Enterprises upto Rs. iii.10 lakhs (which is mandatory). Upto Rs. Upto Rs. 7. up to Rs 5 alcs 4 Weeks 4 Weeks 4 Weeks Beyond Rs 5 alcs. Loans/advances granted upto Rs. the guidelines for obtaining collateral security/ third party guarantee on case to case basis as determined by the Bank shall continue. as under: i. SECURITY NORMS FOR MSME ADVANCES: - - - In respect of loans/advances to Micro and Small Enterprises (including loans sanctioned to Khadi & Village Industries and other Govt. This stipulation is relaxed subject to the following: i. The borrower provides primary security or primary and collateral security put together in the form of land and building to the extent of 100% of the sanctioned Page 4 of 32 .100 lakhs to Micro and Small Enterprises without collateral security and/or third party guarantee are to be covered under CGMSE unless the borrower provides Collaterals to the extent of 100% or more of the loan amount and hence no authority was empowered to permit waiver of obtention of CGMSE cover.. sponsored schemes). at three times of the Bank Rate notified by Reserve Bank. Micro & Small up to Rs 25 lacs Medium 4 Weeks 4 Weeks 4 Weeks 30 days 45 days 45 days Above Rs 25 lacs Micro & Small 8 Weeks 8 Weeks 8 Weeks Medium 30 days 45 days 8 Weeks    Medium Provided such applications are complete in all respects.100 lakhs whose borrowal accounts are covered under Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE). DELAYED PAYMENT TO MICRO AND SMALL ENTERPRISES    The buyer to make payment on or before the date agreed in writing. Coverage under Credit Guarantee Fund for Micro and Small Enterprises (CGMSE): i. Small Enterprises other than above a (i) to (iii) and Medium Enterprises. no collateral security/third party guarantee is insisted. he shall be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or.25 lakhs in respect of units whose track record and financial position are good as per Bank records.  The buyer fails to make payment of the amount to the supplier. ii. ii. Branches to issue Token of Service on receipt of application Rejection Of Credit Proposals of MSME is subject to concurrence of the next higher authority. In respect of loans/advances to Micro.

This is applicable for all branches i. educational institutions. if more than one limits are sanctioned). iii. in case of accounts risk rated as Moderate Risk . Debt Equity Ratio may be relaxed upto 3. REJECTION OF CREDIT PROPOSALS UNDER MSME: - Applications for credit facilities from SC/ST customers shall not be rejected at branch level and such applications shall be referred to the next higher authorities for their prior decision / permission. Presently. ii. The borrower shall be rated as low. 9. 11. TAKE OVER NORMS FOR MSME ADVANCES  The respective Sanctioning Authority may permit take over of Borrowal accounts from other Banks/ FIs upto his normal delegated powers without obtaining permission/ clearance from the next Higher Authority. However. normal or moderate risk based on the latest balance sheet available.Post sanction clearance from GM (HO) to be obtained If circle is headed by GM and for HO Power accounts .limit. However. CGMSE cover is not available for credit facilities extended to retail traders. REQUIREMENT OF RISK RATING OF MSME ACCOUNTS: o The risk rating of eligible borrowers is a pre sanction exercise.2 Lakhs and above are rated individually and under the Page 5 of 32 .. - Rejection of export credit proposals shall be immediately reported to C&MD through the concerned Wing at HO. ( Ho Cir 270/2012) As far as possible. All the accounts of the borrower shall be under standard category. in addition to the security of assets created out of our finance (exposure. NOC/Consent letter need not be insisted. 10. Joint Liability Groups (JLG) and Medium Enterprises.. both Specialised and other than Specialised SME branches. - Whenever applications for loans under Govt sponsored schemes are rejected by the Branch Manager himself / herself for valid reasons. CO/HO. the same can be permitted subject to proper and justifiable reasons and duly undertaking a fresh project appraisal by PAG. a register is to be maintained to this effect which shall be examined by the controlling authorities during their branch visits. proposals of CAC of the Board/MC Powers may be rejected by C&MD or ED in the absence of C&MD. in exceptional cases where take over of such project is necessitated. borrowal accounts of enterprises where project undertaken is yet to be completed may not be taken over from other banks/ FIs.e.. training institutes. All borrowers with exposure of Rs.HO Cir 270/2012    Current ratio can be relaxed upto 1. training-cum-incubator centres.to be sanctioned by the circle head as below: If circle is headed by DGM . Self Help Groups (SHG).Respective sanctioning authority. However.

SCHEME FOR ENERGY SAVINGS FOR SMEs: Purpose: For acquiring energy saving equipments and / or adopting energy conservation measures. Subsidy from NSIC is available towards rating fee in respect of Micro & Small enterprises. Bank has also entered into memorandum of understanding with various credit rating agencies for SME rating of the Micro. jigs. Internal Rating Model Risk Assessment (RAM) Manual Model Small Value Model Portfolio Model - The individual Borrowal accounts with sanctioned/ proposed limit Model Over Rs. 12. tools.  Borrowal accounts classified as Standard Asset. Margin: 15% to 25% of the cost of the fixed asset to be acquired under the loan.  Current account holders having dealings exclusively with us satisfactorily for a period of last one year. Small & Medium Enterprises.ASC S1 or S2.appropriate risk rating models developed for the purpose. Page 6 of 32 . 13. Disbursement: shall be made in one stretch or in stages during the tenability of the limit against proforma invoices/ estimates and minimum disbursement shall be Rs 25. 2 Lakhs and not more than Rs. SCHEME FOR STANDBY CREDIT FOR CAPITAL EXPENDITURE OF MSME Purpose: For meeting unforeseen/ urgent requirement for acquisition of Fixed assets like Generator set. Quantum of Loan: 25 % of the original value of the existing Plant & Machinery subject to maximum of Rs 25 lakhs. moulds.000 at a time.5 Crores are to be mandatorily rated External Credit Assessment Institutions (ECAI). Eligibility: Our existing MSME borrowers having satisfactory dealings with Asset Classification as Standard Asset. Repayment: within a period of over 36 months and within 60 months in monthly/ quarterly installments. Guarantee Cover: CGTMSE is available in respect of aggregate credit facility permitted to MSME units upto Rs 100 lakhs subject to conditions. borrower ratings are subject to annual review. 2 Crores Over Rs. balancing equipments. replacement of existing machinery items. Security: Prime: Asset created out of the loan Collateral security & Personal Guarantee: obtained for the existing credit Facility shall continue. 20 lakhs and not more than Rs. Eligibility:  Units under Small Scale Sector & Medium Enterprises. etc to maintain the production and/or to acquire necessary equipments/ machinery for modernization of unit.  Cost of energy consumption to constitute not less than 20% of the total production presently. Nature of facility: will be permitted as Term Loan. at the time of each renewal of Working capital Limits. 2 Crore Over Rs.20 Lakhs Exposure is analyzed on pooled basis at HO All exposures above Rs.

O.2006)     Eligibility: (only for MSMEs) Existing clients with good track record for at least for a period of preceding three years. In respect of Risk Rated (CRR) accounts. Additional security to be obtained taking into account of quantum of loan and aggregate limit enjoyed by the party. For loans above Rs 5 lakhs for SSIs and MEs as determined by the Bank on merits. Collateral security: Securities held for Working capital limits and /or for existing Term Loans.00 lakhs Margin: 10% of the Project cost. Personal Guarantee: to be obtained wherever necessary. Guarantee Cover: CGMSE is available in respect of eligible accounts.CIR 285/06 dt 18. Margin: (a) 25% of the investment made in respect of new machinery (b) 50% for second hand machinery ROI: As applicable to Term Loan of similar tenure Security: Prime: Fixed Asset created/ acquired under the Term Loan.100 lakhs subject to conditions. Nature of Facility: Term Loan Quantum of Loan: Upto Rs 50. Page 7 of 32 . upto Low Risk LR3 and categorized under ASCC S1 or S2. 10.00 lakhs for new machinery and maximum of Rs 15 lakhs for second hand machinery which is not more than 2 years old from the original date of purchase.000 to the first 100 units on a first come first served basis which is in addition to the grant of Rs 25. Unit should possess energy audit report issued by an approved Energy Consultant/ Auditor. For arriving the value of machineries WDV or market price whichever is less is reckoned. excluding land & building. Purpose: To reimburse the investment made on Fixed Assets. ASCC S1 accounts Accounts classified as Standard Assets continuously in the previous 3 years in respect those which are not subjected to ASCC norms. Repayment: In 5-7 years including moratorium of 6 months. Collateral security: NIL upto Rs 5 lakhs for MSME units.000 being provided by IREDA (first 100 units) 14. Security: Prime: Asset created out of the credit facility. Quantum of Loan: Upto Rs 100. Grant: Bank provides 25% of the cost of Energy Audit/ Consultancy charges with a maximum of Rs 25. ROI: 1 % less than applicable rate. LOAN SCHEME FOR REIMBURSEMENT OF INVESTMENT MADE IN FIXED ASSETS BY MSMEs : (H. Capital Expenses incurred towards creation/ acquisition of fixed assets during the immediately preceding 6 months may be reimbursed. If not Risk Rated. Guarantee Cover: CGTMSE is available in respect of aggregate credit facility permitted to MSME units upto Rs.

O shall identify 10% of the case for random checking. documentation. In deserving cases repayment holiday upto 3 months can be permitted.00 lakhs.      15. LOAN SCHEME FOR SECURING ISO CERTIFICATION Purpose: For acquiring Testing/ Calibrating equipment and to meet the expenditure on of consultancy. Sanctioning Authority. etc. Quantum of Finance: Upto Rs 5 lakhs Security: Prime Security. Documentation. Advance payment/ initial deposit receipt/ Stamped receipt. Project Cost: Not exceeding Rs. ROI: As applicable. SOCC EXCLUSIVELY FOR MSMEs: Purpose: A liberalized credit facility to MSME and Retail Traders who are not in a position to maintain detailed stock books for working capital needs. Other points: SME Sulabh at Circle Office shall maintain a record of sanctions made by the branches/ offices under the scheme. Stock Statement submission: Simplified once in a month. Inspection : Monthly. in the preceding 2 years unit should not have defaulted to Bank or FIs for payment of dues. certification fee.as applicable to Term Loan. Agreement for sale if any in case of second machinery. Book Debts Statement: Detailed book debt statement is submitted once in 6 months. Eligibility: Existing MSME clients having dealings with us for at least 2 years. 4 Lacs. Classification & reporting: . Out of the above record C. Guarantee Cover: CGTMSE is available subject to conditions (Except RTs). Page 8 of 32 .Asset created out of the credit facility Repayment: Facility is permitted as Running Limit subject to renewal / review every year. audit. Profit making.Upfront fee: As applicable to Term Loans Repayment: In monthly/ quarterly/ half yearly instalments within a maximum period of 5-7 years. Documents to be verified/ obtained to ascertain the proof of investment made in fixed assets: Certificate from Chartered Accountant. Original Bills/ Invoices. Repayment: In 3 -5 years Security: Prime: Asset created out of loan if any. Detailed once in six months for industries and once in 12 months for retail traders. Quantum of Loan: 75 % of the project cost subject to maximum of Rs 3. Checking of valuation by Chartered Engineers/ Panel Valuers Bank shall absorb the fee payable for panel Valuer for undertaking valuation for the second time for the purpose of random checking. 16. Margin: 25% on the Project cost.

CIR. Any subsequent renewal/ enhancement. State Handicrafts Corporations are not eligible under the scheme of coverage.00 lakhs (aggregate amount) Margin Security: : For limits upto Rs 25.000: 15 to 25% Asset created out of the finance: No Collateral security.  ACC issued to the individuals are eligible. Guarantee Cover: CGTMSE is available subject to conditions Validity: 3 Years. Federation SHGs. Debt Equity Ratio: Not less than 2:1. Insurance is waived for accounts upto Rs.50000/-.223/2006) Credits qualifying for Guarantee cover:  Loans granted under the ACC issued by the Bank.Preference would be given to Artisans registered with Development Commissioner (Handicrafts).  ACC issued to SHGs. Page 9 of 32 . ARTISAN CREDIT CARD SCHEME (ACC): Purpose: To meet the Working Capital and/or Term Loan of Artisans.  The GF / ASF amount would be debited to this corpus by CGTMSE and guarantees issued / validated.Beneficiaries of other Government Sponsored Schemes will not be eligible.  In order to facilitate increased flow of credit to the artisans in handicrafts sector and to obviate the need for seeking reimbursement of Guarantee Fee (GF) / Annual Guarantee Fee (ASF) paid by Member Lending Institutions (MLIs) for guaranteed accounts. .Thrust in financing would be on clusters of artisans who have joined to form SHG Quantum of Loan: Upto Rs 2. Co-Operative societies. Guarantee Cover: CGTMSE is available subject to conditions.Collateral security: Approved securities and unencumbered fixed assets of the Unit (for clean portion of the loan).000: NIL For limits above Rs 25. the concerned party has to bear the guarantee fee. COVERAGE OF ARTISANS CREDIT CARD HOLDERS UNDER THE SCHEME OF CGTMSE: (H. 17.  The guarantee fee is paid by the Development Commissioner Handicrafts only once to an artisan. Monthly stock statement waived. Quarterly inspection to be conducted. the Office of DC (Handicrafts) has proposed to place advance funds every year with CGTMSE for 4 year period so that MLIs need not pay GF / ASF for credit facility extended by them to artisans in handicrafts sector. 18.O.All artisans involved in production/ manufacturing process . . Eligibility: .

COMPOSITE LOAN SCHEME FOR MSMEs Purpose: Simplified scheme devised under single window concept of RBI for acquiring equipments.00 lakhs Margin: Nil upto Rs 2. Guarantee Cover: CGTMSE is available in respect of aggregate credit facility permitted upto Rs 100. Quantum of Loan: Maximum of Rs 100. Collateral security: NIL upto Rs 5 lakhs: For loans above Rs 5 lakhs as determined by the Bank on merits..2007 to 31. construction of work sheds and to meet WC needs of tiny and MSME. Security: Prime: Asset created out of the credit facility. Eligibility: Artisans.  Any other appropriate body of the Concerned State Govt.03.04. / Union Territory assigned with the task of handicraft development. 20.2 Lacs. CREDIT LINKED CAPITAL SUBSIDY SCHEME (CLCSS)     The operation of the scheme has been extended from 01.00 lakhs. Application procedure for artisans: Application through any one of the following:  Regional Director. 2009 will be reimbursed from the DC (Handicrafts) corpus.00 lakhs: 25% for loans above Rs 2. Village and Cottage industries engaged and MSME units in tiny sector in manufacturing. All GF/ASF received for eligible cases from April 01.2013 The Ministry of MSME has renamed the Credit Linked Capital Subsidy Scheme for Technology Up-gradation of Small Enterprises “ Credit Linked Capital Subsidy Scheme (CLCSS)” Nature Of Limit : Term Loan Purpose: To enable the Small Enterprises (Manufacturing) units in Specified Industries for induction State of Art Technology with a view to improve productivity and to bring improvement in the quality of products.  Priority to Women Entrepreneurs  Existing units registered with State Directorate of Industries proposing to upgrade the State of Art Technology with or without expansion & new units which are registered with the State Directorate of Industries which set up their facilities only with Page 10 of 32 . 19.00 lakhs subject to conditions. Repayment: In 3 to 10 years including initial moratorium of 12 to 18 months. DER : 2:1 to be maintained for loans over Rs. and/or to improve environmental conditions etc. preservation and servicing by utilizing locally available natural resources and/ or human skills. Office of the Development Commissioner (Handicrafts)  State Handicraft Development Corporation  Directorate of Cottage and Small Scale Industry of the State Govts. Eligibility:  Sole Proprietorships / Partnerships / Co-operative Societies / Private or Public Limited Companies in Small Enterprises (Manufacturing) sector.

15 lacs.5Lac Incentive: 75% concession in the Bills collection charges. Insurance Coverage: Assets acquired and security charged is to be insured.9. Collateral security: Aggregate limits upto Rs 5 lakhs : NIL Limits of above Rs 5 lakhs First charge on Fixed assets/ inventory or any other Assets acceptable to Bank. BE-SE SCHEME Purpose: To discount/ negotiate Bills of Exchange (pre accepted bills or Bills drawn under LCs) drawn on reputed Joint Stock companies/ Public sector undertakings representing genuine trade transactions. Our Bank (TUF Cell.For Bills above 90 days usance but not exceeding 180 days. Guarantee Cover: CGTMSE cover available wherever eligible.50 %p. and HO) is also one of the Nodal Agencies (along with SIDBI and NABARD) for implementation / administration of CLCSS independently in respect of loans granted by bank under CLCSS. Guarantee Cover: CGMSE is available in respect of aggregate credit facility permitted upto Rs.a. Capital Subsidy: Upto 15 % subject to a maximum of Rs. Prime Corporate Credit Wing. . LENDING TO MICRO CREDIT GROUPS (CIR. only for such projects where term loan have been availed from Bank and the same is subject to ceiling specified under the scheme. 100 Lacs. Maximum Loan: Rs. Drawer of the Bills should be an MSME unit. Margin: 25 % on the project cost.appropriate and proven technology duly approved by Governing & Technical Advisory Board. Upfront Fee : 1% of the term loan sanctioned. 22. if the limits are over Rs. Borrower accounts of the units are classified as Standard Assets. 21.25 % p. Drawee of the Bill should be a reputed JSC/ PSU.100 lakhs subject to conditions.04. New SME units coming to our fold (taken over accounts) are also Margin: 5% to 10% ROI: .2006. Repayment: 3-7 years. etc. Security: Prime: First charge on receivables. Circle Heads are having Powers to completely waive bill collection charges. Eligibility: eligible.For Bills upto 90 days usance -8. Nodal Agency: Since 04. 178/2009): Objective : The scheme provides credit to MCG of persons belonging to economically disadvantaged sections of the society.a. Page 11 of 32 . Security: Assets acquired out of loan and collateral/personal guarantee as insisted by Bank. Personal guarantee of partners / directors / corporate.

10 Lacs.  LUCC is issued for WC requirement and running account facility is permitted as OCC/OD. Monthly stock statement waived upto Rs. the accounts shall be covered under CGTMSE. Limit: Per member Rs.50000/.10 Lacs. Group Meetings: Compulsory.waived.  Enhancement can be permitted at the time of annual review within the overall ceiling of Rs. SRTO – SME Services: Objective : Loans to transport operators for purchase of HCV/LCV. Margin : Under priority – upto Rs.25000/.50000/. Eligibility : RT.– NIL Above Rs. Other features: Insurance upto Rs. Purpose : To meet WC requirements. Quantum : Rs. Laghu Udhyami Credit Card (LUCC): Objective : To provide hassle free credit to artisans.max. 23.(max. ROI: As applicable to SHGs. Max. Page 12 of 32 .Group : The loans can be sanctioned for smaller group with 3-5 members in URBAN areas and 5-10 members in RURAL & SEMI-URBAN areas.(For availing debt swap loan facility. Card validity : 3 years with annual review.2. For SMEs.00 lakhs.10 Lacs and having satisfactory dealing for 3 years.25000/.25000/. Others – 10-15%. for group. Existing parties enjoying credit facilities upto Rs.25000/.500000/. Margin : Upto Rs. MME Artisans.– 15% to 25%.. retail traders and SMEs. SB Account: Compulsory for MCG and account in the joint names of member can also be opened. Individual members can also open NO FRILL account in individual name.) – Rs. Debt swapping facility to group members is also permitted upto a maximum of Rs. Renewal: 24. Records / Register : Compulsory. Cheque book marked LUCC.NIL. Finance can be extended for Agriculture and allied activity. the loan availed from money lender should be at least one year old and an undertaking letter from the member that he will not avail the loan from the money lender again).

For used vehicles – Not exceeding 5 years.00 lacs where collaterals are not to be obtained. 274/2009.00 lacs (RRBs / FIs) and Rs.10. Used vehicles: Vehicles not more than 5 years old and in good running condition.00 lakhs and upto Rs.50. of India and SIDBI jointly setup CGTMSE.2008).10. Repayment period : Not exceeding 6 years excluding moratorium period of maximum 3 months. Can be relaxed upto 4:1.For used vehicle: 25% of the valuation report / purchase consideration / depreciation value of the vehicle whichever is less.12. 66/2010 87/2012. CGTMSE cover shall be available for eligible collateral free credits upto Rs.00 lacs unless borrower is not ready to bear the fee and offer collaterals acceptable to bank (Coverage amount enhanced from Rs.100. DER: Not more than 3:1. Time limit for lodgment of applications for guarantee cover: Loans Sanctioned during the quarter April-June Lodging of applications prior to the expiry of the quarter July-September Page 13 of 32 . 104/2009. 14/2008. For loans / advances upto Rs. CGTMSE coverage is compulsory. Credit facilities eligible under the scheme: Fund based and/or Non fund based credit facilities extended by Member Lending Institutions (MLI) to a single eligible borrower in the Micro and Small Enterprises sector for credit facility not exceeding Rs. 98/2012. Credit Guarantee Fund for Micro & Small Enterprises (187/2007. 422/2009.50. Insurance: Compulsory. Credit facilities extended by more than one bank and / or financial institution jointly and / or separately to eligible borrower upto a maximum upto Rs. Disbursement: Directly to the dealer.00 lacs (Scheduled Commercial Banks and select Financial Institutions) by way of term loans and / or working capital facilities on or after entering into agreement with the Trust. 100.00 lacs extended by banks by way of term loan and/or working capital facility to eligible SME borrowers including information technology and software industries.50. Discretion given to the sanctioning authorities to waive obtention of CGMSE cover stands withdrawn.100. without any collateral security and / or third party guarantees.100 lacs per borrower subject to ceiling amount of individual MLI or such amount as may be specified by the Trust.00 lacs wef 08. 69/2008. 25. 406/2012)) Govt.100.00 lacs to Rs. DSCR: Not less than 1. CGTMSE coverage is MANDATORY for loans above Rs.

50 lakh subject to overall ceiling of Rs.85 % for more than Rs. However for loans sanctioned on or after 01.4.50 lakh plus 50% of amount in default above Rs.2013 a composite all in guarantee fee is in place of one time guarantee fee and annual service fee.5 lakh upto Rs.50 lakh 75% of the amount in default subject to a maximum of Rs.00% for limits upto Rs.5.50 lakh One time Guarantee Fee: Cir 406/2012: One-time guarantee fee at specified rate ((a)currently 1. Percentage of Cover: Category Maximum extent of Guarantee where credit facility is: Upto Rs. Sikkim) (other than credit facility upto Rs. which is 1.100 lakh Rs.00 lakhs and 0.00 lakhs (b) 0.50 lakh 80% of the amount in default subject to a maximum of Rs.00 lakhs for others and (b) 0.75%.5. in case of credit facilities upto Rs.25 lakh Above Rs.July-September October-December January-March October-December January-March April-June The time limit for lodgment of applications for guarantee cover is linked to the date of sanction of credit facility and NOT to the date of disbursement/release of credit facility to the borrower.50% in case of credit facility above Rs.37. for credit facilities upto Rs.50.00 lakhs in respect of Micro.5.75%.5 lakh Micro Enterprises Women entrepreneurs/ Units located in North East Region (incl.50 lakh upto Rs.01.50.00 lakhs and 1.00 lakhs sanctioned to units situated in North Eastern Region including State of Sikkim) of the credit facility sanctioned (comprising term loan and / or working capital facility) shall be paid upfront to the Trust by the institution availing of the guarantee within 30 days from the date of first disbursement of credit facility (not applicable for Working capital) or 30 days from the date of Demand Advice (CGDAN) of guarantee fee whichever is later or such date as specified by the Trust.5.5 lakh to micro enterprises) All other category of borrowers 85% of the amount in default subject to a maximum of Rs.00% for limits upto Rs.37.100. women enterprises and units situated in North Eastern Region including State of Sikkim) of the credit facility sanctioned – Ref HO Cir 406/2012  Page 14 of 32 .37.40 lakh Above Rs.00 lakh 75% of the amount in default subject to a maximum of Rs.

2013 onwards.. CGTMSE would be sending Demand Advices for payment of Guarantee Fee. inclusive of Service tax. Mode of payment of Guarantee Fee/Annual Service Fee: Once the applications are lodged with CGTMSE by SME Section at concerned Circle office. on or before May 31. with effect from the subsequent June 01.00 upto Rs 100 lakhs of sanctioned credit facility shall be paid upfront to the Trust by the Institution availing of the guarantee cover within such period as may be specified by the Trust.85 Annual Guarantee Fee (AGF) [% per annum] Others Upto Rs 5 lakhs 1.ANNUAL GUARANTEE FEE (AGF) in respect of MSE accounts sanctioned on or after 1st January 2013 and guarantee approved by CGMSE as under: Credit Facility Women. Lock in period for preferment of claim: Page 15 of 32 . Micro Enterprises and units in North East Region (incl Sikkim) 0. Guarantee start date. at four per cent over Bank Rate. In the event of non-payment of annual service fee by May 31 of that year or any other specified date.as mentioned above. 5 Lakh and 0.e. Such demand would be with effect from the date on which previous AGF is expiring till March 31 of that year.e. of every year. The guarantee start date (i. for the period of delay. the guarantee under the scheme shall not be available to the lending institution unless the Trust agrees for continuance of guarantee and the lending institution pays penal interest on the service fee due and unpaid. for 2nd AGF) would be raised for the guarantees approved in the previous financial year (till March 31st) for which the AGF has been received till March 31. per annum.00 Above Rs 5 lakhs and 1.50% in the case of credit facility upto Rs. demand for Annual Guarantee Fee (i. CGTMSE shall be generating a composite demand. material date in terms of Credit Guarantee Scheme) would be the date on which proceeds of AGF are credited to Trust‟s Bank account. or at such rates specified by the Trust from time to time. The AGF demands for subsequent years would be on “Full Financial Year basis” excepting for the terminal year of guarantee where AGF demand would be till validity of guarantee cover..2013 service fee is replaced by composite all in guarantee fee vide HO Cir 406/2012. together with the Annual Guarantee Fee as applicable.1.75 0. In the subsequent financial year in the month of April. The demand on MLI (Bank) for AGF in respect of fresh guarantees would be raised upon approval of guarantee cover. The AGF/guarantee cover would be valid for one year from the material date i.e. 5 Lakh) on pro-rata basis for the first and last year and in full for the intervening years on the credit facility sanctioned (comprising term loan and / or working capital facility) shall be paid by the lending institution within 60 days i.(Cir 583/2013)  ANNUAL SERVICE FEE: The annual service fee at specified rate (currently 0.. For loan sanctioned on or after 1. From September 01.75% in the case of credit facility above Rs.e.

within 30 days. The amount due and payable to the Bank in respect of the credit facility has not been paid and the dues have been classified by the bank as NPA. initiation of legal proceeding as a pre condition for invoking guarantee shall be waived for credit facilities upto 50000/. to takeover the assets of the borrowers and the amount realized. The lock in period of 24 months from either the date of last disbursement of the loan to the borrower of the date of payment of the guarantee fee in respect of credit facility to the borrower.1. from the sale of such assets or otherwise shall first be credited in full by the Bank to the Trust before it claims the remaining 25% of the guaranteed amount. has elapsed.2013)      The guarantee in respect of that credit facility was in force at the time of account turning NPA. The MLIs are to lodge the applications for claim within a maximum period of one year from the date of NPA if NPA is after the lock-in-period or within one year of lock-in-period if the NPA is within lock-in period. if the following conditions are satisfied: ( two years for loan sanctioned on or after 1. subject to the claim being otherwise found in order and complete in all respects.01. MLIs to indicate the date of NPA in particular calendar quarter. Page 16 of 32 . In the event of default.subject to the condition that the executive committee of MLI headed by an officer not below the rank of General Manager should examine and waive the same( Ref 406/2012) The claim should be preferred by the Bank in such manner and within such time as may be specified by the Trust in this behalf.2013. For loan granted on or after 01. by end of subsequent quarter through online system. if any. if any. Invocation of Guarantee: Member Lending Institutions are required to inform the date of which the account was classified as NPA. The balance 25% of the guaranteed amount will be paid on conclusion of recovery proceedings by the Bank.Member Lending Institutions (MLI) is permitted to lodge claims for invocation of guarantee in respect of accounts which have turned NPA after a Lock-in period of 18 months. Claim:    The Trust will pay 75% of the guaranteed amount on preferring of eligible claim by the lending institution. The loan facility has been recalled and the recovery proceedings have been initiated under due process of law. The Trust will pay to the Bank interest on the eligible claim amount at the prevailing Bank Rate for the period of delay beyond 30 days. the Bank shall exercise its rights. whichever is later. Provided that the bank shall not make or be entitled to make any claim on the Trust in respect of the said credit facility if the loss in respect of the said credit facility had occurred owing to actions/decisions taken contrary to or in contravention of the guidelines issued by the Trust.

Scheme of Reimbursement Of 50% of CGMSE One Time Guarantee Fee for New Accounts: (Cir. 50 lakhs: Permitting Authority:  To enable faster Credit decisions. The sanction to be reviewed and confirmed by the next higher authority at RO / CO before disbursement of the loan. when demanded by the Trust.) Current Ratio 1. from the date of the initial release of the claim by the Trust to the date of refund of the claim. 50 lakhs will have to be rated internally and accounts with Risk Rating of LR 1. Promoter's contribution minimum 30% of project cost. Credit facilities of above Rs.50 and above Fixed Assets Coverage Ratio(FACR) 1.3 and Normal Risk (NR) only to be considered for financing. Repayment Period in respect of Term Up to 6 years excluding moratorium Loans period  All proposals above Rs. ((Relaxations can be permitted by the next higher authority at RO / CO. 50 lakhs .100 lacs will have to be rated internally by bank and should be investment grade. 66/2010) Page 17 of 32 . Debt Equity Ratio 2:1 Overall DSCR 1. the said guidelines are since modified and respective sanctioning authorities are delegated to take decision on coverage of loans above Rs 50 lakhs upto Rs 100 lakhs provided the stipulated benchmarks are complied with. to implement the project and manage the enterprise successfully. technical knowledge/ availability of professional/ technical & managerial team. Coverage of loans above Rs. The Bank shall pay such penal interest.)   The sanctioning authority to satisfy about the capability of the promoter entrepreneur. if such a recall is made by the Trust in the event of serious deficiencies having existed in the matter of appraisal/renewal/follow up/conduct of the credit facility or where lodgment of the claim was more than once or where there existed suppression of any material information on part of the Bank for the settlement of claims. Guarantee coverage for credit facilities above Rs.25 % and above. keeping in view the past experience.4 and above Internal Rate of Return (IRR) 5% and above from estimated weighted average cost of funds. Bank shall be liable to refund the claim released by the Trust together with penal interest at the rate of 4% above the prevailing Bank Rate. (Cir 104/2009)   All proposals for CGMSE cover above Rs. subject to the following. Viability parameters (Relaxations can be permitted by the next higher authority at RO / CO. 2. 50 lakhs under CGMSE scheme may be extended to the eligible enterprises.Internal guidelines.50 lacs upto Rs.

whichever is earlier by debiting to General Charges Account. in such cases also guarantee fee may be reimbursed. Waiver of CGMSE coverage (HO Cir 399/2013) Page 18 of 32 . (after adjusting towards the cost incurred by Bank for recovery of the amount). the details of guarantee fee paid is to be recorded in the Master Sheet so that the particulars are easily available at the time of permitting reimbursement. shall be appropriated in such a manner so that losses on account of deficit in recovery of the credit facility between the Trust and the Bank are in the proportion of 75% and 25% respectively. the recoveries are to be deposited by the Bank with the Trust.     Reimbursement of 50% of entry fee to new Micro and Small Enterprises accounts sanctioned on or after 01. (after adjusting towards the cost incurred by Bank for recovery of the amount). interest shall be payable to the Trust by the Bank at the rate which is 4% above Bank rate for the period for which payment remains outstanding after the expiry of the said 30 days. in respect of the credit facility towards which the amount has been recovered by the Bank. During the intervening period.and covered under CGMSE scheme. However it is to be ensured that remittances made to CGTMSE on account of recovery in borrower‟s account does not exceed the claim settled amount. if any. The Trust shall appropriate the same first towards pending service fee. In the case of running accounts. Appropriation of amount received from the lending institution   The amount received from the Bank shall be appropriated in order in which the service fee. and the balance if any. penal interest and other charges due to the Trust. the same shall be deposited by the Bank with the Trust.02. However. then the appropriation shall be made first towards service fee and then towards the penal interest and finally towards any other charges payable in respect of the eligible credit facility.2010. Appropriation of amount realized by the Bank in respect of a credit facility after receipt of claim amount   Subsequent to the Trust having released a sum to the Bank towards the amount in default. Appropriation of the amount recovered after closure of the account    Where recoveries are effected after writing off the dues and treating the account as closed. if the account becomes NPA and thereafter a performing asset only by recovery of overdues & not by restructuring. If the service fee and the penal interest have fallen due on the same date. if any amount due to the Trust remains unpaid beyond a period of 30 days from the date on which it was first recovered. penal interest and other charges have fallen due. Reimbursement to be done at the time of closure of the loan or on completion of 5 years. if Bank recovers money subsequent to the recovery proceedings initiated by it. as mentioned above towards the share of CGTMSE. there could be some enhancements during the 5 year period and in such cases. Guarantee fee to be reimbursed to those accounts who meet their repayment commitment and is a Standard account at the time of reimbursement.

training institutes.The borrower provides primary security or primary and collateral security put together in the form of land and building to the extent of 100% of the sanctioned limit. The company incurs losses for TWO years or cash loss for ONE year. c. self help groups. Incipient sickness or „handholding stage‟ is defined. beyond the accepted timeframe. training-cum-incubator centres. REHABILATATION OF SICK SME UNITS: Purpose To provide adequate and timely assistance to potentially viable MSE units which have already become sick or likely to become sick. educational institutions. The decision on viability of the unit should be taken at the earliest but not later than 3 months of the unit becoming sick under any circumstances. normal or moderate risk based on the latest balance sheet available.  26. Hand holding support to such units should be undertaken within a maximum period of TWO months of identification of such units. There is delay in commencement of commercial production by more than SIX months for reasons beyond the control of the promoters. An account may be treated to have reached the „Handholding Stage‟ if any of the following events are triggered: a. The stipulation that the unit should have been in commercial production for at least two years has been removed. Based on a viability study. Presently CGMSE cover is not available for credit facilities extended to retail traders. The capacity utilization is less than 50 % of the projected level in terms of quantity or the sales are less than 50 % of the projected level in terms of value during a year. if more than one limits are sanctioned).   The borrower shall be rated as low. joint liability groups and Medium Enterprises. b. the viable/potentially viable units are to be provided rehabilitation package. Relief/ concessions extended there under are: RELIEFS AND CONCESSIONS AVAILABLE FOR THE REHABILITATION OF SICK MICRO AND SMALL ENTERPRISES MICRO ENTERPRISES: The package of reliefs may essentially comprise of rephasing the existing loans into repayment in convenient instalments payable in Page 19 of 32 . Definition of A Micro And Small Enterprises is considered „sick‟ when Sick MSE a) Any of the borrowal account of the enterprise remains NPA for units three months or more OR b) There is erosion in the net worth due to accumulated losses to the extent of 50 % of its net worth during the previous accounting year. in addition to the security of assets created out of our finance (exposure. Stipulated time frame for deciding the viability of a unit. All the accounts of the borrower shall be under standard category.

government and other concerned agencies. Deferment of interest: There may be cases when an enterprise would not be generating enough cash to make payment of interest under restructuring due to delay in commencement of operations or achieving break-even. Working Capital Term Loan (WCTL): The principal deficit in the working capital may be segregated as working capital term loan (WCTL). the interest accruing for a period maximum of 6 months may be deferred which would be payable within 3 years. if any shall also be treated as a component under deficit to arrive at the WCTL component. as may be necessary. after implementing a relief package spread over a period not exceeding five years from the commencement of the package from banks. SMALL ENTERPRISES: 1. 5. Financial Benchmark Parameters: The formulation of package will involve evaluation of viability of the enterprise and the same shall be examined by adhering to essential financial benchmark parameters furnished in HO Cir 407/2012 Appendix II Cir Nos: 103/02. on working capital and term loan may be segregated into Funded Interest Term Loan (FITL). 3. WCTL may be repaid in a period of 5 years. This may be payable within 3 years.407/2012. Fresh finance: Fresh finance to meet essential capital expenditure and working capital requirements may be provided by way of term loan and working capital credit limits. 7. The term loan shall be repaid within a period of 7 years. In case of need to carve out Working Capital Term Loan (WCTL) and Funded Interest Term Loan (FITL). The unduly overdue Bills liability which is considered unrecoverable.34/2013 When a SME unit considered potentially viable . to continue to service its repayment Page 20 of 32 . Such WCTL may be carved out based on the drawing power as at the end of the month prior to the cut off date arrived at for restructuring. financial institutions. Funded Interest Term Loan (FITL): Unrecovered interest if any. 6. Rephasement/Reschedulement of existing term loans: The repayment programme of the existing term loans is rephased/ rescheduled so as to be repaid within a maximum period of 10 years. In such cases.270/2012. 4.A unit may be regarded as potentially viable if it would be in a position. Such fresh finance shall be granted only with a minimum margin of 15% from the promoter. 2. the norms applicable to Small Enterprises can be applied.next 5 to 7 years. Promoter’s contribution: Promoters‟ sacrifice and additional funds brought by them should not be less than 15% of the Bank‟s sacrifice.

is a financier.5% below the prevailing fixed / BPLR wherever applicable. The unadjusted interest portion of the cash credit account after segregation may be funded as Working capital Term Loan with a repayment schedule not exceeding 5 years. such charges should be waived from the accounting year of the unit in which it started incurring cash losses continuously After the above is done. No interest may be charged on funded interest and repayment of such funded interest should be made within a period not exceeding 3 years from the date of commencement of implementation of the rehabilitation programmed Unadjusted interest dues such as interest charged between the date upto which rehabilitation package was prepared and the date from which actually implemented. WC limits may be extended at a rate not exceeding the BPLR Page 21 of 32 .obligations as agreed upon including those forming part of the package without the help of the concessions after the aforesaid period. The financial institutions should not be asked to provide for interest due to the Bank in the computation of future cash losses and this should be taken care of by the future cash accruals. How cash losses are treated?   Cash losses excluding interest as may be incurred during the nursing programme may also be financed by the Bank or FI. the unpaid interest on this term loans and cash credit during the period should be segregated from the liability and funded. Addl. The ROI applicable may be 1. Future cash losses should be worked out before interest on working capital etc due to Bank and should be financed by the FI if it is one of the financiers of the unit. .5% to 3% below the prevailing fixed rate / BPLR wherever applicable to all sick SME units including Micro and Decentralised units. may also be funded on the same terms as stated above What are the reliefs & concessions for rehabilitation of potentially under Term Loans and Working capital Term Loan?   viable units The rate of interest on term loans may be reduced.The repayment period of restructured (past) debts should not exceed SEVEN years from the date of implementation of the package .In the case of tiny/decentralised sector units. the period of relief‟s / concessions and repayment period of restructured debts have been revised so as not to exceed Five and Seven years respectively as in the case of other SME units What are the reliefs & concessions for rehabilitation of potentially viable units under interest on cash credit and unadjusted interest?     If penal interest and other changes have been charged. wherever considered necessary by not more than 3 per cent in the case of Tiny / Decentralised Sector units and by not more than 2 per cent for other SSI units below the document rate. if only of them. How working capital is treated?   Interest on working capital may be charged at 1.

An impending default may be considered for an advance being found eligible for restructuring. The borrowers displaying delinquency deficiencies from the Special Watch List. Non viable entities and not possessing reasonable certainty of repayment of accounts on restructuring.BIFR cases without their express approval. Terms of restructuring not agreed by the borrower client. Eligible categories Standard. IDENTIFICATION: To be done primarily at branch level through evaluation of conduct of the account and based on the intensity of the irregularities and probable chances of continuing default and eventually resulting in classification of the asset as non performing in the books of the bank. Page 22 of 32 . Any of the following actions distinctly or jointly will be termed as restructuring:  Re-phasing /Rescheduling the repayment in case of an outstanding term loan with or without change in balance repayment period/ instalments  Downward variation of interest payment terms (not under competitive reasons)  Conversion of irregularities or a portion in outstanding working capital limits into WCTL/FITL payable over a period  Conversion of irregularities or portion in outstanding working capital limits/term loans into debentures/equity. Advances slipped to NPA can also be brought under restructuring. RESTRUCTURING OF ADVANCES: (HO Cir 245/2010) It is a process by which bank grants concessions to the borrower for economic or legal reasons relating to borrower‟s financial difficulty.  Rescheduling the payment of interest outstanding/accruing on term loans into FITL / deferment or conversion into FITL/debentures/equity. Borrowers affected by natural calamities and the advances were already restructured or eligible to be restructured under RBI guidelines.  Changes in terms of payment of interest/instalment on the prevailing restructured facilities.27.Wilful defaulters and / or borrowers indulging in fraud and malfeasance. Sub-Standard and Doubtful assets Ineligible categories Loss Assets.

s formed for this in case of advances of above Rs.Any time before classification as loss assets. GENERAL PRINCIPLES: Restructuring cannot take place without the formal consent/application of the debtor. the concerned branch and/or processing section at administrative offices can undertake the exercise satisfying themselves about the viability irrespective of amount of loan or category. Other than Mfg enterprises .O.Before / after commencement of operations Consumer loans / Housing Loans / Agri loans / Capital Market exposures / other Advances . However the process of restructuring can be initiated by the Bank in deserving cases subject to the customer agreeing to the terms and conditions. In other cases wherein other reliefs are considered with/without re-phasement / reschedulement: a) Micro Enterprises: Page 23 of 32 . Reasonable certainty of repayment by the borrower Viability Study: If the proposal is limited to re-phasement / re-schedulement of existing loans. Restructuring should be based on the viability parameters that primarily look into the cash flows of the borrower. No account will be taken up for restructuring unless financial viability is established and/or there is reasonable certainty of repayment as per the terms of restructuring package.Identification of the borrower will have to be confirmed by the committee at C.25. Basis for Restructuring: Financial viability of the future operations to be established based on the viability parameters. Establishment of Viability and Viability Study: Stages: Industrial / Manufacturing units .Before / after commencement of commercial production/operation.00 lacs and wherein action has been initiated under SARFAESI Act.

25:1. assistance of AEOs/Agricultural consultancy cell at H O can be utilized. 2. 25.Overall DSCR may not be lower than 1.25. Viability study to be conducted by the PAC of the C. DSCR in any year may not fall below 1:1 ii) ROCE . it can be upto 1. Sanctioning powers of H O .00 lacs . 2.20:1. In exceptional circumstances reputed consultants under the panel of CDR / IBA or any other reputed institution can be entrusted with the approval of sanctioning authority or GM HO. In exceptional cases. For computing cost of capital. Outstanding exceeding Rs. b) All other Enterprises: Outstandings not exceeding Rs.Project Appraisal Group H O. Outstanding more than Rs. Financial Benchmark Parameters: a) Small Enterprises: i) DSCR .00 Crore: Limits sanctioned under the sanctioning powers of Circle Authorities.Branch may compile the viability report.25.00 lacs and not exceeding Rs. Advances to individuals classified under consumer loans .Branches can undertake the studies.00 Crore: The viability may be through Chartered Accountants//PAC/PAG/TFOs/Valuer from the Banks panel of valuers experienced in conducting such viability study.The viability study shall be based on the cash flow / income generation supported by a viability report prepared by the branch officials.00 lacs. cost of equity may be considered as equal to cost of borrowed funds. The screening committee at CO/HO can decide on it. (Cost of funds employed).(optimum year) iii) I R R: I R R in respect of projects under implementation may be at least to 2% above the cost of capital. Advances granted to pursue agricultural.A Minimum ROCE equivalent to bank‟s BPLR minus 2% may be considered adequate. iv) Extent of sacrifice: Sacrifice on the part of the bank may be in the form of waivers.O. reduction in interest rates. The extent of sacrifice would be estimated on the basis of net present value of the sacrifice during the period for which the sacrifice is assumed to be operative computed as under: The difference between the present value of future cash flows (representing the interest at the existing rate charged on the advance before restructuring and principal) discounted at normal rate of interest specified to similar rated accounts or card rate as applicable Page 24 of 32 . conversion of a portion or entire part of the advances into equity / debentures or a combination thereof. Activities: In case of agricultural activities beyond Rs.

Large and Medium Enterprises: 1. in exceptional cases.25:1.Bank‟s BPLR minus 1% is considered adequate. In case of Medium Enterprises.and The present value of future cash flows (representing the interest at the rate charged on the advance upon restructuring and principal) discounted at normal rate of interest specified to similar rated accounts or card rate as applicable. The extent of Bank‟s sacrifice amount computed on present value method would not exceed 15% of the amount of restructured dues to the Bank. 5. 4. In any year it should not fall below 1. H O power account PAG (HO) to prepare viability study. WCTL and FITL.33:1.25 shall be the deciding factor for considering the financial viability. 3. ROCE . 2. DSCR . In respect of working capital facilities the sacrifice component may be computed as indicated in the above para reckoning the limit sanctioned as the principal amount and taking the tenor as one year. Micro Enterprises: Page 25 of 32 . it can be upto 1. Extent of sacrifice: The sacrifice so computed on present value method will not be more than 10% of the restructured amount due to the bank.25:1 and in exceptional cases. 6.Overall DSCR minimum – 1. it can be upto 1.Minimum . Compliance to the viability parameters relating to the loan life ratio of 1.25:1. Gap between IRR and the Cost of Capital : The benchmark gap between IRR and cost of capital may be at least two percentages for projects under implementation and one percentage in other cases if computed. DSCR covering entire repayment period – 1. This procedure will be adopted in respect of TL. Gross Profit Margin: This has to be compared based on the data available in corporate database and industry information available with the Bank. Loan Life Ratio (LLR): LLR = Present value of available cash flow during loan life period -----------------------------------------------------------------------Maximum amount of loan Commercial Real Estate: PAC (CO) shall carry out viability study. In any year it should not fall below 1.

Maximum limit is Rs 3. TL to be repaid within a period of 7 years. Principal and / or unpaid interest may be converted as debentures/ equity MICRO ENTERPRISES: Existing loans can be rephrased with repayment in convenient instalment payable in next five to 10 years.10. WCTL may be carved out based on DP as at the end of the month prior to cut off date arrived at for restructuring and unduly overdue bills which is considered unrecoverable may also be added and repaid in a period of 5 years. 6. can be extended for 5 years.Max 10 Years.can be considered to meet essential capital expenditure and WC by way of term loan and WC limits.which may not be less than 1.00 Crores.Unrecovered interest on WC and TL to be repaid in 3 years. Beyond Rs.12 month(subject to annual review). 3.Interest accruing for maximum of 6 months may be deferred to be repaid within 3 years. 3.Upto 10 lakh.Half Yearly. LARGE AND MEDIUM ENTERPRISES: 1.Interest accruing for maximum of 6 months may be deferred to be repaid within 2-3 years. FITL .2 years. Conversion into debentures/equity .LR-18 month.Max 7 . 2. Promoter‟s contribution . 7.15 month. Fresh finance .The focus will be on the reasonableness of cash flow and overall DSCR. 28.10 Years. 2. MR. Re-phasement / Re-schedulement of Existing Term loans .can be considered to meet essential capital expenditure and WC by way of term loan and WC limits. Re-phasement / Re-schedulement of Existing Term loans . WCTL may be carved out based on DP as at the end of the month prior to cut off date arrived at for restructuring and unduly overdue bills which is considered unrecoverable may also be added and repaid in a period of 7 years. 4. Limit is to be assessed based on turnover method or MPBF method. Stock inspection.2 lakh dependent on risk rating. Beyond 10 lakh-quarterly  Tenability: Upto Rs. Collateral security as Mortgage of land and building with Page 26 of 32 .. 5. NR.Not less than 15% of Bank‟ sacrifice to be brought.2 lakh. Deferment of interest .Not less than 15% of Bank‟ sacrifice to be brought.  Besides 100% prime Security. TL to be repaid within a period of 7 years.OD SME scheme: - Enterpreneurs having 2 years satisfactory dealings with us and new clients having satisfactory market report. WCTL/FITL – As applicable to Small Enterprises. RELIEFS AND CONCESSIONS: SMALL ENTERPRISES: 1.Unrecovered interest on WC and TL to be repaid in 3 years and in exceptional cases. 4. Deferment of interest . FITL . Promoter‟s contribution . 6. Fresh finance .Part of the outstanding. 5.

00 lacs. And 20% above Rs 50. Grant at 30% for SE and 20% for Non SE units to maximu of Rs 50 lacs. 30. Noida for footwear. leather goods and garments and saddlery. approved local bodies/ competent authority and converted for non agricultural purpose by the competent authority. In case of Term Loan sanctioned under this scheme for the purpose of construction of factory building along with purchase of machineries.00 lacs on cost of P&M by Govt. Mortgage of immovable property acceptable to the Bank. REMOT – REjuvenation MOdernisation and Technology upgradation: - Scheme for Coir industry. to the beneficiaries in area specific and minimum Rs 10. the primary security value by way of equitable mortgage of land of building may not be sufficient to give the required security comfort for the advance and hence.  All other guidelines similar to Canara Trade.00 lacs with promoters investment of 5%. before completion of the building. CGTMSE fee and Rs 4200 per weaver as subsidy is available from Government. Disbursement of assistance above Rs 25. INTEGRATED DEVELOPMENT OF LEATHER SECTOR SCHEME(IDLS SCHEME): - SIDBI is the nodal agency for assistance. WEAVER CREDIT CARD(WCC) - Loan scheme for Handloom Weavers for working capital and term loan requirements. SCHEME FOR RICE SHELLERS / POHA MANUFACTURER: - In the form of WC limit or TL or both. Security Assets created out of loan. up to maximum of Rs 25. Overall assistance limit is 2 crores.00 crores. Government subsidy 40% project cost. 32. of India.2 Lakhs. Special ROI based on collateral comfort.-  - value not less than 125% of the limit sanctioned. Coir board.Bank shall pay interest on the prorate grant released by coir board . In case of non release of the term loan amount within 10 calender days . However. Chennai for Tanneries & Footwear Design & Development Institute (FDDI). collateral security by way of Mortgage of Land and Building to be obtained equivalent to the value of the proposed construction cost . Card validity is 3 years subject to annual review. Central Leather Research Institute (CLRI). in such cases.Either Primary or Collateral or Primary and Collateral and whose value is not less than 50% of the limits permitted. Subsidy is upfront. Cochin is nodal agency. Maximum permissible limit per borrower is Rs. the valuation of the same to be in relation to Guideline Value as advised by the competent authority in respective States from time to time. Project cost maximum Rs 5. 3% interest subvention. Submission for stock statement waived. Vacant sites with no superstructure thereupon may also be taken as security for the above purpose provided they are allotted by Govt.00 lacs will be released in four instalments. footwear components.  29. Page 27 of 32 . 31.at running rate of interest on deposit. Godown inspection half yearly. Repayment for TL is restricted to 36 months.

CGTMSE AGF absorbed by Bank.00 lacs quarterly simplified NF 585. Volvo Eicher Commercial Vehicle. subject to annual review.: 15%. CANARA MSE SATKAR - New scheme for eateries like fast food centres/dabhas/small canteens/restaurants etc subject to guidelines for food act if any of local authorities/ other competent authorities.00 lacs upto Rs 100. Nil margin up to Rs 25000. Rs 10. Margin up to Rs 25000/. Bank announced every Friday as MSE Pragati day. An undertaking to maintain food safety compliance from the beneficiary of the scheme. No further interest concessions allowed in this scheme.00 lacs -Rural/village. below moderate risk.- CGTMSE coverage as per the prevailing guidelines.25% with 0. Stock statement up to Rs 2.: Nil and Above Rs 25000/.00 lacs with WC limit tenability of 3 years.25% concession for CGMSE covered account. Self Help Group.00 lacs – Urban/Metro. ROI – BR + 0. 20% margin for stocks and 25% book debts. Maximum cap for finance is Rs 2.00 lacs . 36. Tata Motor & Bajaj Auto limited for vehicle financing at our existing term & conditions. Inspection once in 6 months.00. CANARA MSE PRAGATI: (HO Cir 382/2013) - In the form of WC limits / STL or term loans for MSE borrower (Excluding traders. Finance under the scheme is as 85% of PC for TL. Page 28 of 32 .SU/Taluk HQ.25% concession for CGMSE covered account and 0. Detailed SS every march. TL repayment : maximum 7 years. Above Rs 2. Self Help Group. Joint Liability Group) Limit up to Rs 10. 33. 35.55% with 0. 7 days stock level for STL.00 and 15% margin for limit above Rs 25000. ROI – BR + 1. subject to annual review. Bank has announced new campaign „MISSION 60” to increase micro enterprises lending.00 lacs and up to Rs 5. TL repayment is maximum of 7 years including RPH. 50% concession on Processing Charges. TL repayment – 5 years and STL within 1 year.00 lacs – Not necessary. WC limits as per assessment. Limits to be covered under CGTMSE. LOAN SCHEME FOR FINANCING ROAD TRANSPORT OPERATORS UNDER MOU with Mahindra Truck & Buses. Joint Liability Group) Limit above Rs 10. Processing fee/upfront fee 50% of normal fee for loan above Rs 5. CANARA MSE UNNATI (HO Cir 381/2013) - In the form of WC limits / STL or term loans for MSE borrower (Excluding traders. educational institutions. Annual CGTMSE fee shall be absorbed by Bank. 34. WC limit with 3 years validity subject to annual review. Stock inspection half yearly. educational institutions. Rate of interest BR + 0.00 lacs Nil fee. STL repayable in maximum of 35 months. Special ROI to be RESET in case of any deterioration in Risk Rating of the account. Rs 5.55%. Non fund based limit also be considered.50% concession for women.00 lacs with WC limit tenability of 3 years. Processing fee/ upfront fee 25% concession on normal fee.

CANARA MSE SUVIDHA  Under Phase I .Introduction of Inward Register for MIS reports in Automated Lending Processing System for MSME loans through existing ALPS pacakage. No DP or submission of stock statement. Repayment period 7 years including moratorium period. Inspection half yearly. Internal Guidelines issued for CGTMSE Guarantee Coverage for credit facilities above Rs.- -   Non fund based limit also be considered. In case of Consortium / MBA arrangement.00 Crores subject to not exceeding 1/3rd of post project TNW. aiming towards reducing cost of production and Emission of Green House Gases (GHG) by upgrading the manufacturing processes towards usage of Energy Efficient Technologies (EET) and encouraging the Micro. Activity should by falling within MSME act 2006. Page 29 of 32 . 39. In the form of Term loan. TEQUP – TECHNOLOGY AND QUALITY UPGRADATION SUPPORT SCHEME FOR IMPLEMENTATION OF ENERGY EFFICIENT TECHNOLOGIES FOR MSME - - The scheme is one of the ten components of the National Manufacturing Competitiveness Programme (NMCP). Tenability for WC limit is 12 months. Viability of project to be assessed as per prevailing guidelines. OR party with good OPL or market report.  38.00 Crores.00 Crore and 20% for above Rs 1. Special ROI to be RESET in case of any deterioration in Risk Rating of the account. To bridge the gap in means of finance and other expenditure for growth of business. Stock statement quarterly simplified NF 585. Minimum Rs 25.00 lacs and maximum Rs 10.00 lacs available. Margin 25% for project cost up to Rs 1. Inspection once in quarter. SCHEME FOR ASSISTANCE TO MSME FOR EXTENDING QUASI EQUITY (RISK CAPITAL) – TERM LOAN - Borrowers enjoying 3 years credit facility with us with profitable tract record. below moderate risk. TL with 5 years repayment period excluding holiday period. LR/NR risk rating or AAA/AA/A/BBB or equivalent ratings. 37.00 crore. Term loan restricted to Rs 5. II charge.50 lakhs advised vide Ho Circular 514/2013 are not applicable to the loans sanctioned under this scheme. 40.00 lacs and maximum Rs 10. Small and Medium Enterprises acquire product quality certification to national/international standards from National Standardization bodies such as Bureau of Indian Standards (BIS) and Bureau of Energy Efficiency (BEE). CGTMSE coverage as per prevailing guidelines. CANARA CONTRACTOR SCHEME: (HO Cir 372/2014): - Scheme for constractors/sub contractors in form of SOD/LC/BG/TL. Detailed SS every march. Moratorium period maximum 3 years. Loan amount Minimum Rs 10.00 crores.  Government grant of 25% of project cost or maximum Rs 10. Security and CGTMSE norms as per prevailing guidelines.

The scoring model in vogue to decide the pricing of the loan up to Rs 2 crores under micro. Vaccant sites with no superstructure can be accepted as security provided the same is allotted by Government approved local bodies and it should be non agriculture purpose. Limit should be collaterally secured by Immovable properties with value of 125% of the loan amount. 41. Purpose: To finance minimum 5 vehicles or min loan amount of Rs 25. abroad visit for business purpose. Margin for TL and NFB is 10%. NEW CREDIT SCORING NORMS FOR MSME PROPOSALS: (HO Cir 251/2014) - - The scoring matrix shall be used only for deciding about the eligibility of the borrower for extending finance. Purpose: Purchase of software/hardware for fashion designing. Model applicable for applicants who apply loan for first time. business and financial parameters. CANARA MSME EXPO – (HO Cir 418/2014): - Term loan for MSME exporters having minimum turnover of Rs 100. 42. Marks earmarked for behavioural.00 cr. management. 25% concession for on applicable charges.- Credit facility up to 9 times of TNW or need based whoever is lower. Account rated up to Moderate risk category. Takeover not allowed. Target group non farm sectors under MSE. Limit should be fixed as per the export turnover of the preceding year. Loan restricted to Rs 25. 44. CANARA MSE SARAL : (HO Cir 250/2014): - It‟s a revised existing GCCS scheme.00 Cr CGMSE cover and above Rs 1. L&B with value min 25% loan amount. Concessions based on scoring model as per Cir. Working capital limits to be arrived as per the formats given in the circular.00 lacs for participation in trade fairs. Loan above Rs 2. TL repayment is 5 years for activity other than construction and 7 years for construction purpose. Repayment maximum 3 years with initial RPH 3 months.00 Cr.00 lacs and maximum Rs 5. small and medium enterprises and the risk rating as per internal/external risk rating model shall continue to be done as hitherto. Page 30 of 32 . Margin linked to scoring model as per circular. Only individuals are eligible.25% concession in ROI for accounts covered under CGMSE. Borrower should have valid licence for operate vehicle. exhibitions abroad or international trade fair in India. All other guidelines applicable for MSME loans. 0. Existing customer with 2 years satisfactory dealings and new clients with satisfactory OPL. CANARA CARAVAN – (HO Cir 419/2014): - Existing Transport operators having 3 years satisfactory dealings.00 lacs. ROI based on internal CRR. Maximum loan amount Rs 50. Participation in trade fairs. Minimum marks 60% or otherwise the proposal to be declined with concurrence of next higher authority.00 lacs and three years satisfactory dealing with us.00 Cr valuation of property by two panel valuers. 43. Repayment max 60 months. Prime security: Vehicle financed and coll sec: up to Rs 1.

TL quantum at the maximum of 90% of project cost and WC limit to be arrived under Page 31 of 32 . Submission of stock statement and inspection quarterly.00 lacs and TL restricted to Rs 200.00 lacs at the option of the borrower.50% concession for women and 0.. Stock statement NF585 once in a quarter.50%. CANARA MSE SMART: ( HO Cir: 295/2014): - Composite loan to MSE Professional for purchase of/construction of office premises/ purchase of P&M /FA and for working capital purpose. CANARA MSE CAP : (HO Cir 301/2014): - Loan against property for MSME borrowers in the form of Working capital or TL. Existing parties. TL repayment: 5 to 10 years. Repayment two wheeler max 60 EMIs and 4 wheeler max 84 EMIs. existing collateral securities to be continued. 0.00 lacs.00 lacs or 10 times of net annual income for loan above Rs 10.00 lacs and min loan Rs 50.00 lacs. Margin up Rs 25000/. Loan for purchase of office FA/equipments restricted to 20% to total eligility.00 lacs.00 lacs.00 lacs. Accounts to be mandatorily covered under CGMSE.00 lacs. Service units : Max of Rs 200. For TL 85% project cost. Maximum loan amount Rs 5.00 lacs. Working capital to be arrived at 10% of previous/expected receipts subject to max Rs 5. Above Rs 10.00 lacs. 50% concession on applicable charges.00 lacs. Working capital max Rs 5. TL is 75% project cost or 5 times of net annual income for loan up to Rs 10.00 lacs. account to be covered under CGMSE and above Rs 100. ROI as per prevailing guidelines. 46. Maximum loan Rs 200. ROI BR + 0. WC limit by way of secured OD. 47.00 lacs CGMSE cover to be taken and AGF will be borne by the bank. Detailed once in a year as at March. Purchase of brand new two wheelers/passenger cars for business purpose. 45. Above Rs 25 lacs can be permitted by Circle head on case to case basis. WC limit with tenability of 3 years. risk rated up to moderate risk. ie CGMSE cover or collateral security. suitable III party gtee or collateral security to be obtained. Professionals should have 2 years experience in the respective field and should possess valid licence / certificate.25% concession for accounts covered under CGMSE. If the borrower are not eligible under CGMSE. TL repayment maximum 5 years and WC with 3 years validity. And for construction loan should no exceed 80% eligible loan component.Nil and above 25%. 90% of on road cost of vehicle or average last three years profit whichever is lower. CANARA MSE VAHAN : (HO Cir 296/2014): - - Vehicle loan for existing as well as new MSME customers. Inspection quarterly. Min loan amount Rs 10. Maximum loan of Rs 25.00 lacs collateral security of L&B atleast 25% of loan amount. For new up to Rs 10.- Working capital and TL. Quantum of loan Mfg unit : Max of Rs 500. Up to Rs 100. ROI according to the internal CRR.

00 lacs : NIL. Margin 10% for TL and WC limits. Facility up to Rs 100. 50% concession in applicable charges. normal and moderate rating is eligible.00 crores.00 lacs. Working capital with 2 years validity and TL with maximum 84 months repayment. Units with low.00 lacs : 25% concessions.25% for CGTMSE covered accounts. Collateral security should be not less than 75% of the loan amount if stipulated. Inspection charges waived. Eligible to cover under CGTMSE.00 lacs BR + 1% for Low and normal risk accounts. WC limit tenability 12 months and TL repayment 5 to 10 years. Loan amount Minimum: Rs 10.- Turnover or MPBF method. The value of collateral security in form of L&B should be 100% loan amount for Mfg units and 125% for service units.00 lacs. 48. Page 32 of 32 . Facilities Upto Rs 10.to Rs 10. Charges. BR+1. Above Rs 10.75% and for TL BR+1.50% and above Rs 10.50% for Women entrepreneur and 0. AGF will be borne by the Bank.50% for the facilities with collateral security value of above 75% and upto 100% of loan amount.25%. Maximum loan amount Rs 200. Working capital and TL can be considered.00 lacs and ineligible accounts collateral coverage minimum 60% of loan facility. ROI up to Rs 10. Not eligible to cover under CGMSE. Valuation of property to be carried out by two independent panel valuers and least value to be taken for consideration. above 5 lacs and up to 10 lacs – 50% concessions. Above Rs 25000/. up to Rs 5. CANARA DAL MILL SUPER: ( HO Cir 481/2014): - - WC limits/TL to Dal processing units under MSME sector. Further concessions in ROI up to 0. CANARA MSE VIJETA: (HO Cir 298/2014): - - Only women entrepreneur of MSME eligible for this type of facility. ROI as per internal CRR. ROI is for WC BR + 0.00 lacs : 20%. No concession in ROI. Margin facility upto Rs 25000/-: Nil.00 lacs : 15% and Above Rs 10.00 lacs to be covered under CGTMSE.00 lacs is BR + 0.25% for moderate risk accounts. Facilities above Rs 100. for the facility with collateral security value of 100% above the loan amount.00 lacs and max: Rs 10. For WC BR + 1% and for TL BR + 1. Stock statement submission once in 6 months and inspection half yearly. 49. Agriculture and vacant land should not be accepted as security.