Introduction – Credit Guarantee Fund Trust for Micro and Small

Eligible Agriculture
Enterprises (CGTMSE) Allied Activities`

• Beekeeping
• Dairy (only Milk processing)
• Agri-clinics & Agri Business Centres
• Food & Agro Processing
• Poultry
• Fishing
• Grading, Sorting
 • PRIMARY & COLLATERAL SECURITIES

• PARTIAL / HYBRID SECURITY COVERAGE- CGTMSE

WILL HAVE NOTIONAL SECOND CHARGE ON THE COLLATERAL
PROPERTY.

• Third party guarantee

• TENURE OF THE GUARANTEE COVERAGE

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 • GUARANTEE COVERAGE ON REDUCING BALANCE

• ENHANCEMENT OF WORKING CAPITAL

• Material date

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 CGTMSE coverage under Hybrid Security

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 Guidelines on Appropriation of the amount

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 Responsibilities of lending institution under the scheme
• evaluate credit applications by using prudent banking judgement, use their business
discretion / due diligence

• closely monitor the borrower account

• safeguard the primary securities

• The guarantee claim is lodged within such time as may be specified by the Trust

• maintain its recourse and initiate for recovery even after claim is received

• should intimate the Trust while entering into any compromise or arrangement, which may
have effect of discharge or waiver of personal guarantee(s) or security

• the right to list the defaulted borrowers’ names and particulars on the Website of the Trust

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 CGTMSE – Benefit to Bank
Collateral Covered CGTMSE Covered
Loan Amount A 1,00,00,000.00 1,00,00,000.00

Guarantee Coverage@75% B - 75,00,000.00

Collateral value C 1,00,00,000.00 -

CRM Eligible value B - 75,00,000.00

RWA Value (100% Risk Weight) D=A-B 1,00,00,000.00 25,00,000.00
Capital Requirement E 11.50% 11.50%
Capital Required in Amt F=D*E 11,50,000.00 2,87,500.00

Capital saved G - 8,62,500.00

Notional Earnings foregone @15% RAROC H=F*15% 1,72.500.00 43.125.00

Net saving in our P/L N - 1,29,375.00

 CGTMSE – Benefit to Bank

Collateral Covered CGTMSE Covered

In case of NPA
NPA Balance I 1,00,00,000.00 1,00,00,000.00

First Claim from CGTMSE J - 56,25,000.00

Balance on which provision required K=I-J 1,00,00,000.00 43,75,000.00
For substandard 20% provision L=K*20% 20,00,000.00 8,75,000.00
Provision saved M - 11,25,000.00

Total saving to Bank (P/L) M+N - 12,54,375.00

Advantage of coverage under CGTMSE

Low Risk Growth

Expand credit book without compromising on Risk Appetite

Capital Adequacy/Provision Advantage

Savings from Capital Charge and Provisioning against loan – benefit
from sovereign guarantee

Fast Recovery
Faster Recovery of institutional dues in case of NPA viz-a-viz other
available recourses

Meet PSL Targets

Meet the priority sector lending targets without taking burden of
excess risk
 Guarantee Coverage After 01.12.2022

• excluding enhancement of existing working capital account already covered under Guarantee Scheme

• In case of renewal /enhancement of existing Working Capital accounts engaged in Trading activity which is
already covered under Guarantee Scheme, the revised extent of coverage & fee shall be applicable.
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