• while levying the annual guarantee fee for the first time,

the fee is collected for the full 365 days from the
guarantee start date then next year on pro-rata basis.
• AGF so demanded would be paid by the MLIs on or before
30th March each year

• In case of pre-closure - Refund of proportionate annual

guarantee fee will be allowed only where closure is marked
in CGTMSE system / refund request is within 3 months from
the date of receipt of fee by CGTMSE.
menu: Guarantee maintenance >> Request for closure
© 2018 Bank of Baroda. All Rights Reserved
 Lock-in Period:
The lock-in period of 18 months from either the date of last disbursement of
the loan to the borrower or the guarantee start date in respect of credit
facility to the borrower, whichever is later, has lapsed.

© 2016 Bank of Baroda. All Rights Reserved. 42

 Claim Process

Online Claim 1st Claim Payment of 1st

NPA marking Remittance of 2nd Claim
Lodgment installment installment
recovery installment
1st installment
 Guarantee of claim is
 NPA to be can be On approval of
marked in settled if claim claim  Any recovery
invoked only  2nd
CGTMSE portal by after initiation application is application 1st received post installment of
end of next of legal action found to be in installment settlement of claim is
quarter from NPA order within 30 (75% of 1st claim, is to settled on
date Claim days eligibility) is be remitted to
application conclusion of
paid through CGTMSE (net recovery
can be lodged  If for any
On up-gradation within 3 years NEFT/RTGS and off legal proceedings
or restructuring queries, claim to be kept in expenses)
from the NPA
MLI can update date/lock in application is CGTMSE Claim
the unit in period based returned for Received A/c
CGTMSE portal on sanction resubmission
date/NPA date
Procedure for treatment of first claim
• First claim received from CGTMSE shall be credited to the G/L
account named as CGTMSE Claim Received Account

• Please note that the first claim amount shall NOT BE CREDITED to
the loan account of the borrower till the time of closure of
account.

In case of multiple accounts where recovery has been made after receipt of claims from the borrower.
The recovery will be first adjusted in CGTMSE Account only.

© 2016 Bank of Baroda. All Rights Reserved. 44

 Waiver of Legal Action
• In case of claims lodged on or after March 14, 2018, having aggregate
outstanding up to ₹50,000/-, by an Officer not below the rank of General
Manager.

• Claims lodged on or after October 08, 2021 - ₹1,00,000/- by an Officer

not below the rank of Assistant General Manager

• In respect of claims lodged on or after January 02, 2023, the threshold for
waiver of legal action has been increased to ₹5,00,000/- by an Officer not below
the scale V of MLI.

• Note: Claims of the respective MLI will be settled to the extent of 2 times of the fee
including recovery remitted during the previous financial year. 45
 Invocation of Bank Guarantee
• to inform the date of NPA in a particular calendar quarter, by end of subsequent quarter.
(Member Login area >> Guarantee Maintenance >> Periodic Information >> NPA Details)

If NPA date is on or after 15.03.2018, The lending institution may invoke the guarantee in respect of credit
facility within a maximum period of 3 years from the NPA date or lock in period whichever is later.

For NPAs prior to 15/03/2018 and after 01/01/2013, time period for claim lodgement will be 2 years and
prior to 01/01/2013, the time period for claim will be 1 year.

The lock-in period of 18 months from either the date of last disbursement of the loan to the borrower or
the guarantee start date, whichever is later, has lapsed.

must initiate legal procedure against the borrower for recovery like SARFAESI, DRT, LOK Adalat, etc.

Waiver of legal action up to outstanding of Rs.5,00,000/- subject to certain conditions

The Trust shall pay 75 per cent within 30 days, if claim in order and filled up in the revised format
the amount realized, if any, from the sale of such assets or otherwise shall first be credited in full by the
lending institutions to the Trust before it claims the remaining 25 per cent of the guaranteed amount.

Balance 25 per cent of the guaranteed amount will be paid on conclusion of recovery proceedings by the
lending institution or after three years of obtention of decree of recovery, whichever is earlier

Settlement of second / final instalment or conclusion of recovery - In following scenario

• whatever assets available were sold off under SARFAESI and amount is remitted to the Trust.
• The borrower is not traceable
• Net-worth of the Personal Guarantor is not worth pursuing further legal course.
• No other assets are available
• Legal action is taken under RRA, Civil Court, Lok Adalat or DRT where there is no further means
to recover the money from the borrower
• The borrower is absconding
• no assets are available and the borrower is absconding. It may not be worth pursuing legal
© 2018 Bank of Baroda. All Rights Reserved
action.
The lending institution 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, in the event of

• Serious deficiencies or
• where lodgement of the claim was more than once or
• where there existed suppression of any material information for the settlement of claims.
• The lending institution shall pay such penal interest from the date of the initial release of the claim
by the Trust to the date of refund of the claim.

Interest shall be payable at 4% above Bank Rate, if recovery amount is not remitted to Trust within 30
days.
One time settlement

In case of OTS:

Following document to be submitted while claiming for 2nd instalment after

conclusion of recovery proceedings by way of OTS:

1. Complete OTS memorandum duly approved by the competent authority along

with the minutes.

2. Account Statement (after NPA date)

3. Bifurcation of the legal expenses deducted

4. legal action must be initiated by the MLI even in the event of OTS.
What will happen if the unit is upgraded to Medium Enterprise or there is death of partners Or
reconstitution of Unit or transfer of funds to other Financial Institution

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.

AGF will be charged on the outstanding loan amount. What will the AGF charges where there has been no
disbursement (TL) or no utilization (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 generated on Guarantee amount.

Whether the interest on term loan and other charges can also be guaranteed by the Trust?

i. Term Loan: - Defaulted amount (inclusive of 1 Quarter interest)

ii. Working capital facility: - Outstanding working capital advance (inclusive of interest up to the date of
NPA).
iii. Other charges such as penal interest, commitment charge, service charge or any other levies /
expenses shall not qualify for the guarantee cover.