1.MSME.docx

[GUIDELINES ON LENDING TO MICRO, SMALL & MEDIUM ENTERPRISES (MSME) ] -------------------------------------------------------------------------------- Micro, Small and Medium Enterprises' mean the enterprises as defined in the MSMED Act, 2006 and the amendments, if any, carried out therein by the Government of India from time to time. **NEW DEFINITION OF MICRO, SMALL AND MEDIUM ENTERPRISES: *A***ll bank loans to MSMEs conforming to the revised guidelines with effect from 1^st^ July 2020would qualify for classification under Priority Sector Lending. 1. **Micro Enterprise:** Where the investment in plant and machinery or equipment does not exceed **one crore** rupees and turnover does not exceed **five crore** rupees. 2. **Small Enterprise:** Where the investment in plant and machinery or equipment does not exceed **ten crore** rupees and turnover does not exceed **fifty crore** rupees. 3. **Medium Enterprise:** Where the investment in plant and machinery or equipment does not exceed **fifty crore** rupees and turnover does not exceed **two hundred and fifty crore** rupees. All the above enterprises are required to register online on the Udyam Registration portal and obtain 'Udyam Registration Certificate'. Retail and Wholesale trade are included as MSMEs for the limited purpose of priority sector lending and are allowed to be registered on Udyam Registration Portal. The certificate issued on Udyam Assist Portal (UAP) to Informal Micro Enterprises (IMEs) shall be treated at par with Udyam Registration Certificate for the purpose of availing Priority Sector Lending benefits. IMEs with an Udyam Assist Certificate shall be treated as micro enterprises for the purpose of PSL classification. **COMPOSITE CRITERIA OF INVESTMENT AND TURNOVER FOR CLASSIFICATION:** A composite criterion of investment and turnover shall apply for classification of an enterprise as micro, small or medium. If an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category but no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover. All units with Goods and Services Tax Identification Number (GSTIN) listed against the same Permanent Account Number (PAN) shall be collectively treated as one enterprise and the turnover and investment figures for all of such entities shall be seen together and only the aggregate values will be considered for deciding the category as micro, small or medium enterprise. **CALCULATION OF INVESTMENT IN PLANT AND MACHINERY OR EQUIPMENT:** The calculation of investment in plant and machinery or equipment will be linked to the Income Tax Return (ITR) of the previous years filed under the Income Tax Act, 1961.In case of a new enterprise, where no prior ITR is available, the investment will be based on self-declaration of the promoter of the enterprise and such relaxation shall end after the 31st March of the financial year in which it files its first ITR. The expression ''plant and machinery or equipment'' of the enterprise, shall be calculated following the Income Tax Act, 1961 and shall include all tangible assets (other than land and building, furniture and fittings). The purchase (invoice) value of a plant and machinery or equipment, whether purchased first hand or second hand, shall be taken into account excluding GST, on self-disclosure basis, if the enterprise is a new one without any ITR. **CALCULATION OF TURNOVER:** Exports of goods or services or both, shall be excluded while calculating the turnover of any enterprise. In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise will maintain its prevailing status **till expiry of one year** from the close of the year of registration. In case of reverse-graduation of an enterprise, whether as a result of re-classification or due to actual changes in investment in plant and machinery or equipment or turnover or both, and whether the enterprise is registered under the Act or not, the enterprise will continue in its present category till the closure of the financial year and it will be given the benefit of the changed status only with effect from 1st April of the financial year following the year in which such change took place. **THE COST OF THE ITEMS TO BE EXCLUDED WHILE CALCULATING INVESTMENT IN PLANT AND MACHINERY:** Cost of following items to be excluded while calculating the value of Plant and machinery as per Section 7(1) (a) of the MSMED Act 2006: - Tools, jigs, dyes, moulds and spare parts for maintenance and the cost of consumables stores; - Installation of plant and machinery; - Research and development equipment and pollution-controlled equipment - Power generation set and extra transformer installed by the enterprise as per regulations of the State Electricity Board; - Bank charges and service charges paid to the National Small Industries Corporation or the State Small Industries Corporation; - Procurement or installation of cables, wiring, bus bars, electrical control panels (not mounted on individual machines), oil circuit breakers or miniature circuit breakers which are necessarily to be used for providing electrical power to the plant and machinery or for safety measures; - gas producer plants; - transportation charges (excluding sales-tax or value added tax and excise duty) for indigenous machinery from the place of their manufacture to the site of the enterprise; - charges paid for technical know-how for erection of plant and machinery, such storage tanks which store raw material and finished products and are not linked with the manufacturing process; and firefighting equipment. - Import duty (excluding miscellaneous expenses such as transportation from the port to the site of the factory, demurrage paid at the port), Shipping charges, Customs clearance charges; and Sales tax or value added tax. **KHADI AND VILLAGE INDUSTRIES SECTOR (KVI):** All loans to units in the KVI sector will be eligible for classification under the sub-target of 7.5 percent prescribed for **Micro Enterprises** under priority sector. Bank loans to food and agro processing units shall form part of agriculture. **OTHER FINANCE TO MSMEs:** - Loans to entities involved in assisting the decentralized sector in the supply of inputs to and marketing of outputs of artisans, village and cottage industries. - Loans to co-operatives of producers in the decentralized sector viz. artisans, village and cottage industries. - Loans sanctioned by banks to MFIs for on-lending to MSME sector as per the conditions specified in the extant Master Direction on 'Priority Sector Lending - Targets and Classification'. - Credit outstanding under General Credit Cards (including Artisan Credit Card, Laghu Udyami Card, Swarojgar Credit Card, and Weaver's Card etc. in existence and catering to the non-farm entrepreneurial credit needs of individuals). - Overdraft to Pradhan Mantri Jan-Dhan Yojana (PMJDY) account holders as per limits and conditions prescribed by Department of Financial Services, Ministry of Finance from time to time, will qualify as achievement of the target for lending to Micro Enterprises. - Outstanding deposits with SIDBI and MUDRA Ltd. on account of priority sector shortfall. **RECOMMENDATIONS OF PRIME MINISTER'S TASK FORCE ON MSME:** A High-Level Task Force was constituted by the Government of India (Chairman: Shri **T K A Nair**), in January 2010, to consider various issues raised by MSMEs. In terms of the recommendations of the Prime Minister's Task Force on MSMEs, banks are advised to achieve **20 per cent year-on-year growth in credit to micro and small enterprises,10 per cent annual growth in the number of micro enterprise accounts and 60 per cent of total lending to MSE sector as on corresponding quarter of the previous year to Micro enterprises.** **COMMON GUIDELINES / INSTRUCTIONS FOR LENDING TO MSME SECTOR:** - Banks should mandatorily acknowledge all loan applications, submitted manually or online, by their MSME borrowers and ensure that a running serial number is recorded on the application form as well as on the acknowledgement receipt. - Banks are mandated **not to accept collateral security in the case of loans up to Rs.10 lakh** extended to units in the MSE sector / PMEGP and on the basis of good track record and financial position of the MSE units, Banks may increase the limit to dispense with the collateral requirement for loans **up to Rs.25 lakh** (with the approval of the appropriate authority). - Banks are advised to strongly encourage their branch level functionaries to avail of the Credit Guarantee Scheme cover, including making performance in this regard a criterion in the evaluation of their field staff. - A **composite loan limit of Rs.1 crore** can be sanctioned by banks to enable the MSE entrepreneurs to avail of their working capital and term loan requirement through Single Window. **CREDIT LINKED CAPITAL SUBSIDY SCHEME (CLSS):** Government of India, Ministry of Micro, Small and Medium Enterprises had launched Credit Linked Capital Subsidy Scheme (CLSS) for Technology Upgradation of Micro and Small Enterprises in the specified 51 sub-sectors/products approved subject to the following terms and conditions: - **Ceiling on the loan** under the scheme is **Rs.1 crore**. - The rate of **subsidy is 15%** for all units of micro and small enterprises up to loan ceiling as above. - Calculation of admissible subsidy will be done with reference to the purchase price of plant and machinery instead of term loan disbursed to the beneficiary unit. - SIDBI and NABARD will continue to be implementing agencies of the scheme. **STRUCTURED MECHANISM FOR MONITORING THE CREDIT GROWTH TO THE MSE SECTOR:** In view of the concerns emerging from the deceleration in credit growth to the MSE sector, an Indian Banking Association-led Sub-Committee (Chairman: Shri K.R. Kamath) was set up to suggest a structured mechanism to be put in place by banks to monitor the entire gamut of credit related issues pertaining to the sector. Based on the recommendations of the Committee, banks are advised to strengthen their existing systems of monitoring credit growth to the sector and put in place a system-driven comprehensive performance management information system (MIS) at every supervisory level (branch, region, zone, head office) which should be critically evaluated on a regular basis; put in place a system of e-tracking of MSE loan applications and monitor the loan application disposal process in banks, giving branch-wise, region-wise, zone-wise and State-wise positions. The position in this regard is to be displayed by banks on their websites. **INSTITUTIONAL ARRANGEMENTS:** - Public sector banks are advised to open **at least one specialised branch in each district**. Further, banks have been permitted to categorise their **general banking branches having 60% or more of their advances to MSME** sector as specialized MSME branches. - **State Level Inter Institutional Committee (SLIIC):** In order to deal with the problems of co-ordination for rehabilitation of sick micro and small units, State Level Inter-Institutional Committees were set up in the States. However, the matter of continuation or otherwise, of the SLIIC Forum has been left to the individual States / Union Territory. - **Empowered Committee on MSMEs:** As part of the announcement made by the Union Finance Minister, Empowered Committees on MSMEs are constituted at the Regional Offices of Reserve Bank of India, under the Chairmanship of the Regional Directors with the representatives of SLBC Convenor, senior level officers from two banks having predominant share in MSME financing in the state, representative of SIDBI Regional Office, the Director of MSME or Industries of the State Government, one or two senior level representatives from the MSME Associations in the state, and a senior level officer from SFC/SIDC as members. The Committee would meet periodically and review the progress in MSME financing as also revival and rehabilitation of stressed Micro, Small and Medium units. It would also coordinate with other banks/financial institutions and the state government in removing bottlenecks, if any, to ensure smooth flow of credit to the sector. - **Banking Codes and Standards Board of India (BCSBI):** The Banking Codes and Standards Board of India (BCSBI) has formulated a Code of Bank\'s Commitment to Micro and Small Enterprises. The Code mentions, inter alia, that the banks are expected to dispose of MSE loan application for a credit limit or enhancement in the existing credit limit **up to Rs.5 lakh within two weeks**; and for credit limit **above Rs.5 lakh and up to Rs.25 lakh within 3 weeks**; and for credit limit **above Rs.25 lakh within 6 weeks** from the date of receipt, provided the application is complete in all respects and is accompanied by documents as per 'check list' provided. While BCSBI has initiated the process of its dissolution, banks may continue to follow their commitments as hitherto under the Code of Bank\'s Commitment to Micro and Small Enterprises. **CLUSTER APPROACH:** All SLBC Convenor banks are advised to incorporate in their Annual Credit Plans, the credit requirement in the clusters identified by the Ministry of Micro, Small and Medium Enterprises, Government of India. They are also encouraged to extend banking services in such clusters / agglomerations which have come up and identified subsequently by SLBC / DCC members. As per **Ganguly Committee** recommendations (September 4, 2004), banks are advised that a full-service approach to cater to the diverse needs of the SSI sector (now MSE sector) may be achieved through extending banking services to recognized MSE clusters **by adopting a 4-C approach namely, Customer focus, Cost control, Cross sell and Contain risk.** A cluster-based approach to lending may be more beneficial:(a) in dealing with well-defined and recognized groups;(b) for making available of appropriate information for risk assessment and(c) for monitoring by the lending institutions. The Ministry of Micro, Small and Medium Enterprises has approved a list of clusters under the Scheme of Fund for Regeneration of Traditional Industries (SFURTI) and Micro and Small Enterprises Cluster Development Programme (MSE-CDP) located in 121 Minority Concentration Districts. In terms of recommendations of the Prime Minister's Task Force on MSMEs banks should open more MSE focused branch offices at different MSE clusters which can also act as Counselling Centres for MSEs. Each lead bank of a district may adopt at least one MSE cluster. **DELAYED PAYMENT:** In the Micro, Small and Medium Enterprises Development (MSMED), Act 2006, the provisions of the Interest on Delayed Payment Act, 1998 to Small Scale and Ancillary Industrial Undertakings, have been strengthened as under: - The buyer has to make payment to the supplier on or before the date agreed upon between him and the supplier in writing or, in case of no agreement, before the appointed day. The period agreed upon between the supplier and the buyer shall **not exceed forty-five days** from the date of acceptance or the day of deemed acceptance. - In case the buyer fails to make payment of the amount to the supplier, he shall be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or, on the date agreed on, at three times - In case of dispute with regard to any amount due, a reference shall be made to the Micro and Small Enterprises Facilitation Council, constituted by the respective State Government. **COMMITTEES ON FLOW OF CREDIT TO MSE SECTOR: The highlights of various committees formulated for** extending credit to MSE sector are: - **High Level Committee on Credit to SSI (now MSE) (Kapur Committee).** - **Committee to Examine the Adequacy of Institutional Credit to SSI Sector (now MSE) and Related Aspects (Nayak Committee)** - **Working Group on Flow of Credit to SSI (now MSE) Sector (Ganguly Committee).** - **Working Group on Rehabilitation of Sick SMEs (Chairman: Dr. K.C. Chakrabarty):**Banks were advised to consider that lending in case of all advances **upto Rs. 2 crores may be done on the basis of scoring model**. Banks have further been advised to undertake a review of their loan policy governing extension of credit facilities to the MSE sector, with a view to using Board approved credit scoring models in their evaluation of the loan proposals of MSE borrowers. **Working Group to Review the Credit Guarantee Scheme for Micro and Small Enterprises:** A Working Group was constituted by the Reserve Bank of India under the Chairmanship of Shri V.K. Sharma, Executive Director, to review the working of the Credit Guarantee Scheme (CGS) of CGTMSE and suggest measures to enhance its usage and facilitate increased flow of collateral free loans to MSEs.The recommendations of the Working Group included, inter alia, mandatory doubling of the limit for collateral free loans to micro and small enterprises (MSEs) sector from Rs.5 lakh to Rs.10 lakh and enjoining upon the Chief Executive Officers of banks to strongly encourage the branch level functionaries to avail of the CGS cover and making performance in this regard a criterion in the evaluation of their field staff, etc. have been advised to all banks. **STREAMLINING FLOW OF CREDIT TO MICRO AND SMALL ENTERPRISES (MSES) FOR FACILITATING TIMELY AND ADEQUATE CREDIT FLOW DURING THEIR 'LIFE CYCLE':** Banks shall review and tune their lending policies to the MSE sector by incorporating therein the following provisions so as to facilitate timely and adequate availability of credit to viable MSE borrowers especially during the need of funds in unforeseen circumstances: - To extend standby credit facility in case of term loans. - Additional working capital to meet with emergent needs of MSE units. - Mid-term review of the regular working capital limits, where banks are convinced that changes in the demand pattern of MSE borrowers require increasing the existing credit limits of the MSEs, every year based on the actual sales of the previous year. - Timeline for credit decisions for loans up to ₹25 lakh to units in the MSE borrowers shall not be more than **14 working days.** For loans above the aforementioned limit, timelines shall be as per the Board approved sanction time norms. All credit related information pertaining to MSMEs including timelines for credit decisions, indicative document checklist etc., shall be displayed under a separate tab prominently on the bank\'s website. **STRUCTURED MECHANISM FOR MONITORING THE CREDIT GROWTH TO THE MSE SECTOR:** Banks shall put in place a structured mechanism to monitor the entire gamut of credit related issues pertaining to the MSE sector. Accordingly, banks shall implement the following: - **Credit Proposal Tracking System (CPTS):** Banks shall put in place a CPTS/ equivalent tracking mechanism to facilitate central registration and a system of e-tracking of all MSME loan applications. This mechanism shall automatically generate an acknowledgement of the application, having a unique application serial number for both physical and online applications. Further, it shall also be ensured that the acknowledgement and status of the application is sent automatically to the applicants. - **Indicative check list of documents:** Banks shall furnish the MSME borrowers with an indicative checklist of documents required for processing the loan application at the time of applying for the loan. - Banks shall monitor the loan application disposal process and pendency beyond sanction time norms at appropriate levels on a **quarterly basis**. The position in this regard shall be displayed by banks on their websites within one month from the end of the preceding quarter. - Banks shall, within the Board approved sanction time norms, convey to the MSME borrowers in writing the main reason/reasons which, in the opinion of the bank after due consideration, have led to rejection of the loan applications. - Banks shall implement a system-driven comprehensive performance management information system (MIS) at branches and supervisory levels. **[CREDIT GUARANTEE FUND SCHEME FOR MICRO & SMALL ENTERPRISES (CGTMSE)]** **[CREDIT GUARANTEE SCHEME FOR BANKS (CGS-I)]** For the purpose of providing guarantees in respect of credit facilities extended by Lending Institutions to the borrowers in Micro and Small Enterprises (MSEs), the CGTMSE scheme was formulated and came into force from **August 1, 2000** and covered eligible credit facilities extended by the lending institutions to eligible borrowers **with effective from June 1, 2000.** **ELIGIBLE BORROWER**: New or existing Micro and Small Enterprises to which credit facility has been provided by the lending institution without any collateral security and/or third party guarantees. However, a "Hybrid / Partial Collateral Security" product allowing guarantee cover on credit facilities having collateral security, for the portion of credit facility not covered by collateral security (unsecured portion), has also been introduced by CGTMSE. In the partial collateral security model, the MLIs will be allowed to obtain collateral security for a part of the credit facility, whereas the remaining part of the credit facility, can be covered under Credit Guarantee Scheme of CGTMSE. Obtaining Udyam Registration Number by the borrower made mandatory for getting guarantee coverage under Credit Guarantee Scheme of CGTMSE for all the guarantee applications lodged on or after January 16, 2023. ***ELIGIBLE MEMBER LENDING INSTITUTIONS (MLIS):*** Scheduled Commercial Banks, Regional Rural Banks, Scheduled Urban Co-operative Banks, Non-Scheduled Urban Co-operative Banks, State Co-operative Banks, District Central Co-operative Banks, Small Finance Banks and Microfinance Institutions can become member as per the present guidelines. **ELIGIBILITY CRITERIA FOR SMALL FINANCE BANKS AS MEMBER LENDING INSTITUTIONS**: The Scheduled Small Finance Banks to be eligible as MLI should have **minimum net worth of Rs.100.00 crores**, External credit rating of **BBB** and above, Should have CRAR as prescribed by RBI, should have **net profit for at least 3 previous financial years** and should be compliant with CRR/SLR and other supervisory prescriptions. **ELIGIBILITY CRITERIA FOR RRBs AS MEMBER LENDING INSTITUTIONS**: The RRBs to be eligible as MLI should have **CRAR of not less than 9%, Net NPA below 5%** of advances, No regulatory defaults. RRBs, which are being / have been merged to form the new entity, should have been assessed by NABARD as \"Sustainably Viable\" or \"Currently Viable\" as per the latest available list prior to their merger. Positive net worth as per audited Balance Sheet post-merger and provided there are no carry forward losses in the Balance sheet of the newly formed entity (RRB) post-merger. ***ELIGIBILITY CRITERIA FOR SCHEDULED URBAN CO-OPERATIVE BANKS AS MLI:*** - Demand & Time Liabilities (DTL) of not less than ₹750 crore on a continuous basis for one year. - Minimum CRAR of 12% - Gross NPA less than or equal to 5% - Continuous net profit for the previous three years. - Compliance with CRR / SLR requirements. - No major regulatory and supervisory concerns. **ELIGIBILITY CRITERIA FOR NON-SCHEDULED URBAN CO-OPERATIVE BANKS, STATE CO-OPERATIVE BANKS AND DISTRICT CENTRAL CO-OPERATIVE BANKS AS MLIs:** CGTMSE vide its circular dated 03 February 2022, has included the captioned institutions as MLIs subject to their; Minimum CRAR of 9%, Net profit during the last completed FY, Gross NPAs of 5% or less, Compliance with CRR / SLR requirements and no major regulatory and supervisory concerns. ***TENURE OF GUARANTEE COVER:*** The maximum period of guarantee cover from Guarantee sanction date in case of Term Loan will be the tenure of the loan and in case of Working Capital for **a period of 5 years or block of a 5 years** where working capital facilities alone are extended or loan termination date, whichever is earlier. However, a review would be undertaken after each block of 5 years by CGTMSE before renewal of the guarantee coverage for next 5 years in case of Working Capital. ***CREDIT FACILITIES COVERED:*** - **Both Fund based and Non-Fund based credit facilities** granted to new or existing Micro and Small Enterprises (as defined in MSMED Act 2006), by the lending institution without any collateral security and/or third-party guarantees are covered under the scheme. (Except personal guarantee given by partner, directors in case of partnership firms, companies' etc.and owner of the immovable property and with partial collateral/guarantee under Hybrid security model as mentioned below). - **The maximum guarantee cover available for different financial institutions are;** a. Public Sector Banks, Private Sector Banks, Foreign Banks, select Financial Institutions: **Rs.500.00 Lakh** b. Small Finance Banks (SFBs), Scheduled and Non-Scheduled Urban Co-operative Banks, State Co-operative Banks and District Central Co-operative Banks: **Rs.200.00 Lakh**. c. Select Financial Institutions and Microfinance Institutions: **Rs.50.00 Lakh.** d. Vide circular dated 15 December 2023; CGTMSE has notified that, the ceiling of guarantee has been increased from http://10.1.46.147:9001/kmtnet/images/rupee.jpg50 lakh **to** ![http://10.1.46.147:9001/kmtnet/images/rupee.jpg](media/image1.jpeg)**200 lakh for RRBs & SFCs** for all the guarantees issued on or after January 01, 2024. - Credit facilities extended by more than one bank and/or financial institution jointly and/or separately to eligible borrower up to a **maximum of ₹5.00 crores per borrower** including retail trade subject to ceiling amount of individual MLI or such amount as may be specified by the Trust for guarantee cover. - CGTMSE vide circular dated 25 February 2022, has allowed guarantee coverage for loans extended for activities pertaining to **Wholesale trade and educational/training institutions**. - The cap of ₹50 lakh/ ₹200 lakh/₹500 lakh is the maximum guarantee coverage limit per borrower based on the outstanding credit facilities and the borrowers can avail incremental credit facilities (i.e. to the extent of reduction in the outstanding exposure limit) under Credit Guarantee Scheme of CGTMSE, subject to maximum cap as mentioned above. - CGTMSE vide circular dated 17 October 2022, has made it **mandatory to obtain Udyam Registration Number** by the borrowers for getting guarantee coverage under Credit Guarantee Scheme of CGTMSE. These modifications in the guidelines were made effective for all the guarantee applications lodged on or after January 16, 2023. **AMOUNT OF EXPOSURE COVERED UNDER GUARANTEE:** The cap of ₹500 lakh is the maximum guarantee coverage limit (irrespective of the unit activity including Trading) per borrower based on the outstanding credit facilities and the borrowers can avail incremental credit facilities (i.e. to the extent of reduction in the outstanding exposure limit) under Credit Guarantee Scheme of CGTMSE, subject to maximum cap of ₹500 lakh. For the purpose of calculating the exposure limit on outstanding basis, the following shall be considered; - In respect of fully disbursed Term Loans, the outstanding as on the date of consideration of fresh coverage shall be considered. - In respect of partially disbursed Term Loans, the entire sanction amount shall be considered. - In case, if the MLI proposes to cancel the undrawn portion of the sanctioned facility, MLI to update the same in CGTMSE portal. - In respect of Working Capital Limits, the total sanctioned amount of working capital limit (irrespective of the utilization) shall be considered. **APPLICATION FOR GUARANTEE COVER & TIMELINES:** - Member Lending Institutions (MLIs) can apply for guarantee cover **anytime during the tenure of Loan** provided the credit facility was **not restructured / remained in SMA2 status in last 1 year** from the date of submission of application. - The guideline was made effective from October 08, 2021 to only fresh coverage / credit facility applying for the first time for coverage i.e the same credit facility should not have been covered previously under CGTMSE / coverage discontinued in between. - Provided further that, **as on the material date**; The Credit facility is **standard and regular (not SMA),** The business or activity of the borrower for which the credit facility was granted has not ceased and/or, The credit facility has not wholly or partly been utilized for adjustment of any debt deemed bad or doubtful of recovery, without obtaining a prior consent in this regard from the Trust. ***HYBRID / PARTIAL COLLATERAL SECURITY PRODUCT:*** The scheme introduced by the trust, allowing guarantee cover on credit facilities having collateral security, for the portion of credit facility not covered by collateral security. Therefore, the remaining part of the credit facility without collateral up to maximum of Rs.500.00 Lakh, can be covered under CGS-I. There is no stipulation of maximum loan limit under the scheme. However, the maximum guarantee coverage would be Rs.5.00 crore per borrower (Rs.2 crore for SFBs/Co-op Banks and RRBs). CGTMSE will, however, have notional second charge on the collateral securities. Accordingly, pursuant to the invocation of guarantee, recoveries made through sale proceeds of the collateral security, may be retained by the MLI for appropriation of dues. The recovery proceeds other than from collateral security would have to be remitted to CGTMSE. There would be no requirement for MLIs to create security / charge in favour of CGTMSE by way of any legal documentation. ***CREDIT FACILITIES NOT COVERED UNDER THIS SCHEME:*** - Any credit facility in respect of which risks are additionally covered under a scheme operated by DICGC or RBI, to the extent they are so covered and any credit facility in respect of which risks are additionally covered by Government or any agency such as MUDRA, Stand Up India guarantee cover etc. - Any credit facility granted in contravention of guidelines of the trust or RBI. - **Any credit facility granted to any borrower, who has availed himself of any other credit facility covered under this scheme or any other guarantee schemes as above, and where the lending institution has invoked the guarantee provided by the Trust but has not repaid any portion of the amount due to the Trust or under other guarantee schemes mentioned above, as the case may be, by reason of any default on the part of the borrower in respect of that credit facility.** - Any credit facility which has been sanctioned by the lending institution with collateral and third party guarantee except under hybrid security model or personal guarantees of directors/partners/owners of property mortgaged. **RESPONSIBILITIES OF LENDING INSTITUTION:** - **The lending institution shall evaluate credit applications by using prudent banking judgment and shall use their business discretion / due diligence in selecting commercially viable proposals.** - **The lending institution shall closely monitor the borrower account.** - **The lending institution shall safeguard the primary securities taken from the borrower in respect of the credit facility in good and enforceable condition.** - **The lending institution shall ensure that the guarantee claim in respect of the credit facility and borrower is lodged in time and in the manner specified by the trust.** - **The payment of guarantee claim by the Trust to the lending institution does not in any way take away the responsibility of the lending institution to recover the entire outstanding amount from the borrower. The lending institution shall exercise all the necessary action against the borrower for recovery of the outstanding amount, including such action as may be advised by the Trust.** - **The lending institution shall, in particular, refrain from any act of omission or commission, either before or subsequent to invocation of guarantee, which may adversely affect the interest of the Trust as the guarantor.** - **The lending institution 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.** **EXTENT OF THE GUARANTEE COVERAGE:** **For cases sanctioned on or after April 01, 2023 (excluding enhancement of existing working capital account already covered under Guarantee Scheme):** +-----------------+-----------------+-----------------+-----------------+ | Category | Extent of | | | | | guarantee cover | | | | (including | | | | | trading | | | | | activities) | | | | +=================+=================+=================+=================+ | | **Upto ₹ 5 | **Above ₹ 5 | **Above ₹ 50 | | | lakh** | lakh &upto ₹ 50 | lakh &upto ₹ | | | | lakh** | 500 lakh** | +-----------------+-----------------+-----------------+-----------------+ | Micro | 85% of the | 75% of the | 75% of the | | Enterprises | amount in | amount in | amount in | | | default | default | default | +-----------------+-----------------+-----------------+-----------------+ | MSEs located in | 80% of the | 75% of the | | | North East | amount in | amount in | | | Region (incl. | default | default | | | Sikkim), Jammu | | | | | & Kashmir and | | | | | Ladakh) | | | | +-----------------+-----------------+-----------------+-----------------+ | Women | 85% of the | | | | entrepreneurs / | amount in | | | | SC/ST | default. | | | | entrepreneurs / | | | | | Person with | | | | | Disability | | | | | (PwD)/ MSE | | | | | promoted by | | | | | Agniveers / | | | | | MSEs situated | | | | | in Aspirational | | | | | District / ZED | | | | | certified MSEs | | | | +-----------------+-----------------+-----------------+-----------------+ | All other | 75% of the | | | | eligible | amount in | | | | category of | default. | | | | borrowers | | | | +-----------------+-----------------+-----------------+-----------------+ - All proposals for sanction of guarantee approvals for credit facilities above ₹50 lakh will have to be rated internally by the MLI and should be of investment grade. - 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. ***For cases approved before 1^st^ April 2023 and on or after 1^st^ December 2022*** +-----------------+-----------------+-----------------+-----------------+ | Category | Extent of | | | | | guarantee cover | | | | (including | | | | | trading | | | | | activities) | | | | +=================+=================+=================+=================+ | | **Upto ₹ 5 | **Above ₹ 5 | **Above ₹ 50 | | | lakh** | lakh &upto ₹ 50 | lakh &upto ₹ | | | | lakh** | 200 lakh** | +-----------------+-----------------+-----------------+-----------------+ | Micro | 85% of the | 75% of the | 75% of the | | Enterprises | amount in | amount in | amount in | | | default | default | default | +-----------------+-----------------+-----------------+-----------------+ | MSEs located in | 80% of the | 75% of the | | | North East | amount in | amount in | | | Region (incl. | default | default | | | Sikkim), Jammu | | | | | & Kashmir and | | | | | Ladakh) | | | | +-----------------+-----------------+-----------------+-----------------+ | Women | 85% of the | | | | entrepreneurs / | amount in | | | | SC/ST | default. | | | | entrepreneurs / | | | | | Person with | | | | | Disability | | | | | (PwD)/ MSE | | | | | promoted by | | | | | Agniveers / | | | | | MSEs situated | | | | | in Aspirational | | | | | District / ZED | | | | | certified MSEs | | | | +-----------------+-----------------+-----------------+-----------------+ | All other | 75% of the | | | | eligible | amount in | | | | category of | default. | | | | borrowers | | | | +-----------------+-----------------+-----------------+-----------------+ ***For cases sanctioned on or after April 01, 2018 and Guarantees approved before December 01, 2022*** +-----------------+-----------------+-----------------+-----------------+ | Category | Extent of | | | | | guarantee cover | | | | (including | | | | | trading | | | | | activities) | | | | +=================+=================+=================+=================+ | | **Upto ₹ 5 | **Above ₹ 5 | **Above ₹ 50 | | | lakh** | lakh &upto ₹ 50 | lakh &upto ₹ | | | | lakh** | 200 lakh** | +-----------------+-----------------+-----------------+-----------------+ | Micro | 85% of the | 75% of the | 75% of the | | Enterprises | amount in | amount in | amount in | | | default subject | default subject | default subject | | | to a maximum of | to a maximum of | to a maximum of | | | ₹ 4.25 lakh | ₹ 37.50 lakh | ₹ 150 lakh | +-----------------+-----------------+-----------------+-----------------+ | Women | 80% of the | 75% of the | | | entrepreneurs/ | amount in | amount in | | | Units located | default subject | default subject | | | in North East | to a maximum of | to a maximum of | | | Region (incl. | ₹ 40 lakh | ₹ 150 lakh | | | Sikkim) (other | | | | | than credit | | | | | facility upto ₹ | | | | | 5 lakh to micro | | | | | enterprises) | | | | | and | | | | | [Agniveers]{.un | | | | | derline}. | | | | +-----------------+-----------------+-----------------+-----------------+ | MSE Retail | 50% of the | | | | Trade/Wholesale | amount in | | | | trade (up to | default subject | | | | ₹100 lakh) | to a maximum of | | | | | ₹ 50 lakh. | | | +-----------------+-----------------+-----------------+-----------------+ | All other | 75% of the | | | | eligible | amount in | | | | category of | default subject | | | | borrowers | to a maximum of | | | | | ₹ 150 lakh. | | | +-----------------+-----------------+-----------------+-----------------+ ***ANNUAL GUARANTEE FEE (AGF):*** AGF will be charged on the guaranteed amount for the first year and on the outstanding amount for the remaining tenure of the credit facilities sanctioned / renewed to MSEs on or after April 01, 2023 including enhancement in existing working capital account already covered under Guarantee Scheme, as detailed below: **Slab** **Standard Rate (SR)\*** **Fee Rate after Discount** **Fee Rate with Risk Premium** ------------------ -------------------------- ----------------------------- -------------------------------- --------- --------- --------- **(-10%)** **15%** **30%** **50%** **70%** 0-10 lakh 0.37 0.33 0.43 0.48 0.56 0.63 Above 10-50 lakh 0.55 0.50 0.63 0.72 0.83 0.94 Above 50-1 crore 0.60 0.54 0.69 0.78 0.90 1.02 Above 1-2 crore 1.20 1.08 1.38 1.56 1.80 2.04 Above 2-5 crore 1.35 1.22 1.55 1.76 2.03 2.30 **The standard rate is across all activity including trading activity.** **RISK PREMIUM & DISCOUNT: CGTMSE had engaged the services of external agency to carry out the analysis of the portfolio of CGTMSE. The agency, inter alia, has also categorized the MLIs based on various critical factors such as NPA rate, claim rate, quick mortality ratio, net flows etc. Accordingly, depending on the degree of risk, MLI with better portfolio would be given the discount of 10% in standard rate whereas MLI with high risk associated would be charged maximum risk premium upto 70% of SR.** - **MLIs newly registered/which do not have sufficient history of transactions under CGTMSE will be placed at 70% risk premium for a period of at least 1 year.** - **The review of Risk classification of MLI would be an annual exercise or at such interval as decided by the Trust.** - **The fee would be charged on outstanding basis i.e First fee (guarantee fee) would be charged on guarantee amount and subsequent fee (annual fee) would be charged on outstanding amount.** - **The total exposure of the MSE would be considered to arrive at the slab of the borrower.** **ADDITIONAL CONCESSION/DISCOUNT IN GUARANTEE FEES:** **The following Categories have been identified for additional concession / discount of 10% in guarantee fee.** - **Women entrepreneurs/ SC/ST/ Person with disability (PwD) Borrowers.** - **MSEs promoted by Agniveers.** - **Units in North East Region (incl Sikkim) upto \`50 lakh.** - **MSEs situated in Aspirational District.** - **ZED Certified MSEs.** **An MSE falling in all the above three categories viz. Social, Geographic, MSE Status shall be eligible for maximum discount of 30%.** **SPECIAL BENEFITS TO MSEs LOCATED IN IDENTIFIED CREDIT DEFICIENT DISTRICTS (ICDD):** In order to promote inclusive growth and financial inclusion in regions that have historically faced challenges in accessing credit facilities, RBI has undertaken various efforts to address credit deficiencies and encouraged banks to lend in districts Identified as Credit Deficient Districts (ICDDs). As part of these efforts, CGTMSE vide circular dated 15 December 2023, introduced special benefits for MSEs located in ICDDs. MSE borrowers situated in ICDDs would get **10% reduction in standard rate of guarantee fee** in addition to other special benefits related to social category and Zed Certification. Further, the **extent of guarantee coverage is increased by 5%** over and above the applicable guarantee coverage (i.e. for guarantee coverage of 75%, the coverage would be 80%, for 85% it would be 90%). The ICDDs would be as per the list issued by RBI from time to time. Presently 184 districts have been identified as credit deficient. **CALCULATION OF GUARANTEE FEE AMOUNT:** - In case of term loans, AGF would be calculated on outstanding amount as on 31st December against each guarantee account and for working capital, AGF would be calculated on present / expected Outstanding as provided by MLI. - For cases covered under Hybrid Security Model Guarantee fee will be charged on the guaranteed amount for the first year and on the proportionate outstanding amount subsequently resulting in lower guarantee fee. - Online module for updating the outstanding amount in respect of eligible guaranteed loan accounts is made available between January 01 to January 15 every year. **PAYMENT OF GUARANTEE FEES:** - Annual Guarantee fee (first time fee) shall be paid 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. - The Annual Guarantee fee (subsequent to first time fee) at specified rate (as specified above) on pro-rata basis for the first and last year and in full for the intervening years would be generated by 1nd week of February every year. AGF so demanded would be paid by the MLIs on or before 30th March each year or any other specified date by CGTMSE, of every year. - In the event of any error or **discrepancy or shortfall** being found in the computation of the amounts or in the calculation of the guarantee fee / annual service fee, such deficiency / shortfall shall be paid by the eligible lending institution to the Trust together with interest on such amount at a rate of **four per cent over and above the Bank Rate.** - In case of **pre-closure / request for refund**, refund of proportionate annual guarantee fee (GF/AGF/ASF) 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. **REVIVAL OF CLOSED ACCOUNTS:** If the guaranteed account gets closed due to non-payment of AGF, the guarantee under the scheme shall not be available and request for revival of accounts/ delayed payment will be considered subject to the following conditions; - Request for revival of account will have to be **submitted within next financial year.** - Account should be **standard and regular** as on date of submission of request for revival and the Trust reserves the right to reject the claim if the account turns NPA within 180 days from the date of revival of account. - Any fee due by the MLI (current and previous FY) will be demanded along with penal interest (@ 4% over Bank Rate, per annum) and additional risk premium \@15% of standard rate for the period of delay. ***INVOCATION OF GUARANTEE:*** - The Member Lending Institutions (MLIs) are **required to inform the date on which the account was classified as NPA in a particular calendar quarter, by end of subsequent quarter.** - 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**, if the NPA date is on or after 15/03/2018. For NPAs prior to 15/03/2018, time period for claim lodgement will be 1 year for cases sanctioned prior to 01/01/2013 and 2 years for cases sanctioned after 01/01/2013. **Conditions for claim:** - The guarantee in respect of that credit facility was in force at the time of account turning NPA and all guidelines of the trust are followed by PLIs. - **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. - **Vide circular dated 15 December 2023, CGTMSE has reduced the lock-in-period for invocation of guarantee and preferment of claim in respect of loans having repayment period upto 36 months and loan amount upto Rs.10 lakh from 18 months to 9 months.** - The credit facility has been recalled and recovery proceedings have been initiated under due process of law. Mere issuance of recall notice under SARFAESI Act 2002 cannot be construed as initiation of legal proceedings for purpose of preferment of claim under CGS.MLIs are advised to take further action as contained in Section 13 (4) of the SARFAESI Act 2002 in eligible accounts before submitting claims for first instalment of guaranteed amount. In case the account is not eligible for recovery under SARFAESI, PLIs may initiate recovery proceeding under any other law and seek the claim for first instalment from the Trust. - However, in case of claims lodged on or after March 14, 2018, initiation of legal proceedings as a pre-condition for invoking of guarantees shall be waived for credit facilities having aggregate outstanding up to ₹50,000/-, subject to the condition that for all such cases, where the filing of legal proceedings is waived, a Committee of the Member Lending Institution (MLI) headed by an Officer not below the rank of General Manager should examine all such accounts and take a decision for not initiating legal action, and for filing claim under the Scheme. Moreover, in respect of claims lodged on or after October 08, 2021, the threshold for waiver of legal action has been increased to ₹1,00,000/- subject to the condition that for all such cases, where the filing of legal proceedings is waived, a Committee of the Member Lending Institution (MLI) headed by an Officer not below the rank of Assistant General Manager should examine all such accounts and take a decision for not initiating legal action. - **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/- subject to the condition that for all such cases, where the filing of legal proceedings is waived, a Committee of the Member Lending Institution (MLI) headed by an Officer not below the scale V of MLI, should examine all such accounts and take a decision for not initiating legal action.** - **In respect of claims lodged on or after April 01, 2023, the threshold for waiver of legal action has been increased to ₹10,00,000/-.** - 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. Any claim lodged / received exceeding 2 times of the total fee including recovery remitted by MLI will be suspended till such time the position is remedied i.e. payout is brought within the payout cap limit. **PAYMENT OF CLAIM AMOUNT BY CGTMSE TRUST:** - The Trust shall pay 75 per cent of the guaranteed amount on preferring of eligible claim by the lending institution, within 30 days subject to the claim being otherwise found in order and complete in all respects. The Trust shall pay interest to the lending institution on the eligible claim amount in case of delay at the prevailing Bank Rate for the period of delay beyond 30 days. The balance 25 per cent of the guaranteed amount will be paid on conclusion of recovery proceedings or till the decree gets time barred. For loans sanctioned on or after 01/01/2013, the 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. - MLIs have option for Single instalment of claim settlement with reduced extent of guarantee by 15% (in respect of extent of coverage of 75%, reduced coverage would be 60%, 80% would be 65% and likewise) where waiver of legal action is applicable. - In the event of default, the lending institution shall exercise its rights, if any, to take over the assets of the borrowers and 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. - 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, 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 there existed suppression of any material information on part of the lending institutions for the settlement of claims. - Every amount recovered and due to be paid to the Trust shall be paid without delay, and if any amount due to the Trust remains unpaid beyond a period of 30 days from the date on which it was first recovered, interest shall be payable to the Trust by the lending institution at the rate which is 4% above Bank Rate for the period for which payment remains outstanding after the expiry of the said period of 30 days. **Settlement of Second/Final claim:** The settlement of second / final instalment will be considered on conclusion of recovery, irrespective of the sanction date of the credit facility. With regards to conclusion of recovery proceedings, following four scenarios as applicable and certified by the concerned authority of the MLI is considered as conclusion of recovery proceedings provided minimum period of 3 years from the date of settlement of first claim has been lapsed. a. If legal action is initiated only under SARFAESI Act and whatever assets available were sold off and the amount is remitted to the Trust. Also, the borrower is not traceable and the Networth of the Personal Guarantor is not worth pursuing further legal course. b. If amount is recovered through sale of assets under SARFAESI and no other assets are available and legal action is taken under any forum such as RRA, Civil Court, Lok Adalat or DRT where there is no further means to recover the money from the borrower and the Networth of the Personal guarantor is significantly eroded. c. If no assets are available and the borrower is absconding, and the Networth of the Personal guarantor is significantly eroded. d. If no assets are available and the legal action is withdrawn as the borrower is absconding and it may not be worth pursuing legal action. For loans sanctioned on or after 01/01/2013, the 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. However, in cases where the legal action has been initiated under SARFAESI Act or RRA, the MLIs may be allowed to lodge 2nd claim after the lapse of three years from date of action under Section 13(4) of SARFAESI Act and the date of Recovery Certificate issued by the Tehsildar respectively subject to following confirmation from the MLIs: a. Personal Guarantees have been invoked and no further recovery is possible. b. No tangible secured assets have been left for disposal and no further recovery is possible. c. The entire recoveries made in the account have been duly indicated in the 2nd claim application/have been passed on to CGTMSE. **SECOND INSTALMENT OF CLAIM SETTLEMENT IN RESPECT OF ACCOUNTS WHERE WAIVER OF LEGAL ACTION HAS BEEN GRANTED**: MLIs are given two options for claim settlement at the time of claim lodgment for cases where waiver of legal action is applicable. - **Option 1:** Single instalment of claim settlement with reduced extent of guarantee by 15%. Eg: in respect of extent of coverage of 75%, reduced coverage would be 60%, 80% would be 65% and likewise. - **Option 2:** Existing claim settlement process in two instalments i.e. 75% of eligibility amount as first instalment & balance 25% as second instalment. For legal waiver accounts, second instalment of claim would be settled after three years from the date of settlement of 1st claim or OTS whichever is earlier. **SPECIAL PROVISION FOR INFORMAL MICRO ENTERPRISES (IME):** In order to facilitate unsecured affordable credit flow to Informal Micro Enterprises, CGTMSE has introduced a \"Special Provision for Informal Micro Enterprises (IME) under Credit Guarantee Scheme\". Informal Micro Enterprises are those enterprises which are **exempted from GST regime**. The features of the scheme are as follows; - Applicable to IMEs **which are exempted from GST** regime and are registered on Udyam Assist Platform (UAP). - The guarantee coverage will be available where the credit facility is **upto Rs. 20 lakh** - The extent of guarantee coverage will be **85%** - The standard rate of annual guarantee fee for Banks and Co-lending (CGS I and Ill respectively) upto Rs.10 lakh shall be **0.37%** and for guarantee above Rs.10 lakh & upto Rs.20 lakh would be **0.45%.** Under CGS -II (guarantee Scheme for NBFCs) normal rates will apply. - Creation of **primary security is not a pre-requisite** for obtaining guarantee. - For invocation of guarantee, initiation of **legal action is not required**. All other covenants of the Credit Guarantee Scheme (CGS - I for banks, CGS - II for NBFCs & CGS III for Co-lending) would apply. **ODISHA CREDIT GUARANTEE SCHEME (OCGS)/ SWATANTRA YUVA UDYAMI (SWAYAM):** CGTMSE in collaboration with the State Government of Odisha has launched a Special Credit Guarantee Scheme \"Odisha Credit Guarantee Scheme (OCGS)/ Swatantra Yuva Udyami (SWAYAM)\" for the MSEs situated in the State of Odisha. Under the scheme 85% of the guarantee coverage will be provided by CGTMSE as being done hitherto and balance 15% coverage shall be provided by Government of Odisha for loans upto \'95,000/- extended by MLIs, taking the overall guarantee coverage to 100%. The enhanced guarantee coverage will be available upto NPA level of 15% of crystallised portfolio (portfolio will be crystallised as on 31st March every year). In case the NPA level exceeds the above limit of 15% of crystallised portfolio, the claims will be settled as per the terms of normal Credit Guarantee Scheme of CGTMSE. The cost of annual guarantee fee shall be borne by the State Government under the Scheme. All the existing MLIs (excluding NBFCs and Small Finance Banks) shall be eligible under OCGS / SWAYAM. **[CREDIT GUARANTEE FUND SCHEME FOR NBFCs (CGS-II): ]** CGTMSE had framed a Scheme for the purpose of providing guarantees in respect of credit facilities extended by eligible NBFCs to borrowers in Micro and Small Enterprises MSEs. The major points of the scheme which are additional / different from the CGS-I scheme are as follows. **Registration criteria of NBFC:** +-----------------------------------+-----------------------------------+ | **NBFCs with Vintage up to 3 | **NBFCs with Vintage more than 3 | | years** | years** | +===================================+===================================+ | Minimum CRAR of 20% | Minimum CRAR of 15% | +-----------------------------------+-----------------------------------+ | Net NPA less than or equal to 4% | Net NPA less than or equal to 4% | +-----------------------------------+-----------------------------------+ | Should have completed one full | Should have reported profit in at | | fiscal year of operations and | least 2 years out of the last 3 | | reported profit. | years of audited financial | | | statements. | +-----------------------------------+-----------------------------------+ | Minimum Net Owned funds ₹ 20 | Minimum Net Owned funds ₹ 50 | | crore and minimum asset size of ₹ | crore and | | 50 crore | | | | minimum asset size of ₹ 100 crore | +-----------------------------------+-----------------------------------+ - The Scheme known as the "Credit Guarantee Fund Scheme for NBFCs (CGS-II)" was launched w.e.f. January 25, 2017. Subsequently, the same has been modified and shall cover eligible credit facility sanctioned by the lending institutions to eligible borrowers under MSE sector with effect from April 01, 2018 on a portfolio basis. It has been decided to introduce Risk based Guarantee fee for the guaranteed portfolio based on the risk rating of the portfolio by the external rating agencies empanelled by CGTMSE. - **Interest Rate Cap:** With effect from 1^st^ January 2024, all MSE Loans having Interest rate **not exceeding 21%** **p.a**.(earlier 25%) will be eligible for coverage under the Credit Guarantee Scheme of CGTMSE.. - \"Portfolio\" means cumulative built up of eligible quarterly sanctions which are fully disbursed by a Member Lending Institution which are standard and regular (not SMA). Each Portfolio of MLI would get crystallized at the end of each quarter in which the portfolio is built up. Accordingly, fresh portfolio would commence from the beginning of the subsequent quarter. Coverage of loan accounts under one quarter would not be covered in subsequent quarters. \"Base Year of the Portfolio\" means the year of inception of the portfolio(s). In other words, the year in which the portfolio(s) is/are built up. - **Payment of Guarantee fees:** In the event of non-payment of annual guarantee fee within the stipulated time, 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 guarantee fee due and unpaid for the entire period of delay at eighteen per cent per annum, or at such rates specified by the Trust from time to time. In the event of any error or discrepancy or shortfall being found in the computation of the amounts or in the calculation of the guarantee fee, such deficiency / shortfall shall be paid by the eligible lending institution to the Trust within 30 days of the demand. In case of delay, the MLI shall pay such deficiency / shortfall together with interest at a rate of 18% p.a, or as may be prescribed by the Trust from time to time. - **Extent of guarantee cover:** The Trust shall fix a Payout cap for each Exposure Limit. Claims under the Exposure Limit shall be settled within the respective Payout cap subject to maximum guarantee cover mentioned afterwards of 'Amount in default' of individual accounts covered in the portfolio' (or such other percentage as may be specified by the Trust from time to time). - **Lodgement of claim:** For defaults within a Portfolio, MLI shall forward/lodge Claim requests after the completion of lock-in period of 12 months from the date of crystallisation of the Portfolio. The lending institution may invoke the guarantee in respect of credit facility within a maximum period of three years from date of NPA, if NPA is after lock-in period. However, if an account turns NPA within lock-in period, the MLI may invoke the guarantee within three years from end date of lock-in period. **MODIFIED GUARANTEE FEES & GUARANTEE COVERAGE IN THE SCHEME FOR NBFCs:** Vide circular dated 18 December 2023, CGTMSE introduced following modifications in the existing CGS-II scheme for all the loans sanctioned by NBFCs on or after January 01, 2024.; 1. Increase in Ceiling of guarantee from http://10.1.46.147:9001/kmtnet/images/rupee.jpg**200 lakh to** ![http://10.1.46.147:9001/kmtnet/images/rupee.jpg](media/image1.jpeg)**500 lakh** per MSE borrower. However, for the guarantee **up to Rs.200 lakh unsecured credit facilities can be covered**, and for guarantee above Rs.200 lakh and up to Rs. 500 lakh, credit facilities should necessarily be secured by way of primary security. 2. Ceiling of Credit Guarantee Cover for credit facility under retail trade segment has been enhanced from Rs.100.00 Lakh per MSE borrower to Rs.500.00 Lakh per MSE borrower. However, for the guarantee above Rs. 200 lakh and up to Rs.500 lakh, credit facilities should necessarily be secured by way of primary security. 3. Charging of Annual Guarantee Fee at lower rate & Higher Extent of Guarantee coverage to Social Category, Geographic & MSE Status of borrower under CGS II as under- **Fee Relaxation to Social Category, Geographic & MSE Status of borrower** **Category** **Social Category (Weaker section / Underserved Section)** **Geographic** **MSE Status** ------------------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------------------------------------------------------------------------------------------- ---------------- -Target Group Women / SC / ST / PwD / Agniveers NER incl. Sikkim, UT of J&K & UT of Ladakh (Upto http://10.1.46.147:9001/kmtnet/images/rupee.jpg50 Lakh) / Aspirational District ZED Certified Relaxation / Concession in fee rate 10% 10% 10% An MSE falling in all the above three categories viz. Social, Geographic, MSE Status shall be eligible for maximum discount of 30% on standard rate. **Extent of Guarantee Cover** **Category (including Trading activity)** **Maximum extent of Guarantee Coverage (where guaranteed credit facility is)** ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------------- **Up to 5 lakh** **Above** ![http://10.1.46.147:9001/kmtnet/images/rupee.jpg](media/image1.jpeg)**5 lakh & up to** http://10.1.46.147:9001/kmtnet/images/rupee.jpg**50 lakh** **Above** ![http://10.1.46.147:9001/kmtnet/images/rupee.jpg](media/image1.jpeg)**50 lakh & up to** http://10.1.46.147:9001/kmtnet/images/rupee.jpg**500 lakh** Micro Enterprises 85% 75% 75% MSEs located in North East Region (incl. Sikkim, UT of Jammu & Kashmir and UT of Ladakh) 80% Women entrepreneurs / SC / ST entrepreneurs / MSEs situated in Aspirational District / ZED certified MSEs / Person with Disability (PwD) / MSE promoted by Agniveers 85% All other category of borrowers 75% \*Not applicable for the NBFCs who have opted for 50% guarantee coverage. 4. Interest Rate Cap: All MSE Loans having Interest rate not exceeding 21% p.a. will be eligible for coverage under the Credit Guarantee Scheme of CGTMSE. **CGTMSE INCLUDES MICROFINANCE INSTITUTIONS (MFIs) as MLIs:** In order to facilitate enhanced credit to economically disadvantaged groups and rural poors, CGTMSE vide circular dated 02 December 2022 has decided to bring MFIs under the schemes of CGTMSE as Member Lending Institutions (MLIs). The eligibility criteria for inclusion of MFI as MLI of CGTMSE are; - Should have been undertaking Micro finance operations for **at least 36 months**. - Prudential grading up to **MfR5** - Minimum CRAR of **15%** - Debt Equity Ratio not more than **10:1.** - Portfolio at Risk \>90 days (AUM) should be less than 5%. - Minimum **Asset size of Rs.100.00 crore** The ceiling of guarantee coverage will be **Rs.50.00 Lakhs per MSE borrower**. All other guidelines of CGTMSE schemes will be applicable. **[CREDIT GUARANTEE SCHEME FOR CO-LENDING (CGSCL)]** CGTMSE has framed a Scheme for the purpose of providing guarantees in respect of credit facilities extended by eligible Banks & NBFCs jointly to Micro and Small Enterprises (MSEs) borrowers under Co-Lending models as prescribed by RBI from time to time. The Scheme shall be known as the "Credit Guarantee Scheme for Co-Lending (CGSCL) shall come into force w.e.f. February 25, 2022. **OPTIONS/MODELS UNDER CO-LENDING:** There are following two options/models to operate under Co-Lending: 1. **Option/Model-1:** **Joint Lending by Banks and NBFCs:** Under this arrangement, the partner Bank and NBFC will jointly lend to the borrower through an escrow account. The due diligence and appraisal will be done by both institutions. There will be irrevocable commitment on the part of the bank to take into its books its share of the individual loans as originated by the NBFC. The guarantee cover under this Option will be for individual loan/credit facility. 2. **Option / Model 2:** Direct Assignment: Under this arrangement, the partner Bank can exercise its discretion regarding taking into its books the loans originated by NBFC as per the Agreement. The guarantee cover under this Option will be for the specified loans/credit facilities selected for co-lending. **ELIGIBLE CREDIT FACILITIES:** - Not exceeding **₹500 lakh (earlier** **₹200 lakh)** for credit facility secured by way of Primary Security; and (ii) not exceeding **₹200 lakh** (earlier ₹100 lakh) for unsecured credit facility by way of term loan and/or working capital facilities without any collateral security and/or third party guarantees. - The cap of ₹500 lakh or ₹200 lakh, as applicable for secured and unsecured loans respectively, is the maximum guarantee coverage limit per borrower under CGSCL based on the outstanding credit facilities extended by pair of member lending institutions to eligible borrower. - As on the material date, the credit facilities should be standard and regular (not SMA) and the business activity of the borrower has not ceased. - Under "Hybrid Security" product the MLIs will be allowed to obtain collateral security for a part of the credit facility, whereas the remaining unsecured part of the credit facility, upto a maximum of ₹500 lakh, can be covered under CGSCL. **CREDIT FACILITIES WHICH ARE NOT ELIGIBLE:** All credit facilities which are not eligible under CGS-I are also not eligible under this scheme. Apart from that, any credit facility which has been sanctioned by MLI(s) where the blended interest rate charged to the MSE borrowers under CLM arrangement is exceeding 21% (earlier 18%) is also not eligible. **ANNUAL GUARANTEE FEES (AGF):** **Slab** **Standard Rate (SR)\*** ------------------ -------------------------- 0-10 lakh 0.37 Above 10-50 lakh 0.55 Above 50-1 crore 0.60 Above 1-2 crore 1.20 Above 2-5 crore 1.35 **INVOCATION OF GUARANTEE:** - The Member Lending Institutions (MLIs) are required to inform the date on which the account was classified as NPA in a particular calendar quarter, by end of subsequent quarter. - 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 end date, whichever is later. Lock-in period shall be 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. - The payout cap for any given year will be calculated at 2 times of the total receipts (i.e. guarantee fee plus recoveries post 1st claim settlement paid to CGTMSE under the Scheme) of the previous financial year passed to CGTMSE by the lending institutions or dealing institutions as applicable. **MODIFICATIONS UNDER CREDIT GUARANTEE SCHEME FOR CO-LENDING (CGSCL) - CGS III:** CGTMSE, vide its circular dated 18 December 2023, has decided to modify the following clauses of the captioned guarantee scheme. 1. **Increase in Ceiling of guarantee from** ![http://10.1.46.147:9001/kmtnet/images/rupee.jpg](media/image1.jpeg)**200 Lakh to** http://10.1.46.147:9001/kmtnet/images/rupee.jpg**500 Lakh** **Existing Clause** **Modified clause** --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- The Trust shall cover credit facilities extended by pair of MLIs to single eligible borrower in the MSEs sector with Guarantee Ceiling i) not exceeding Rs. 200 lakh for the credit facility secured by way of Primary Security; and ii) not exceeding Rs. 100 lakh for unsecured credit facility The Trust shall cover credit facilities (Fund based and / or Non fund based) extended by pair of MLIs without any collateral security / third party guarantee to a single eligible borrower in the Micro and Small Enterprises sector with guarantee ceiling of i) Rs. 500 lakh for the credit facility secured by way of Primary Security; and ii) Rs. 200 lakh for unsecured credit facility. 2. **Blended Rate of Interest** **Existing Clause** **Modified clause** ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Only those credit facilities where the effective interest charged to the MSE borrower under CLM arrangement is up to a maximum of 18% shall be eligible for coverage under CGSCL. Only those credit facilities where the effective interest charged to the MSE borrower under CLM arrangement is up to a maximum of 21% shall be eligible for coverage under CGSCL. 3. **Allowing any MLI (out of a pair of MLI) to avail guarantee for their portion of credit facilities.** **Existing Clause** **Modified clause** --------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Presently no such clause. Any MLI is allowed to lodge guarantee application under Credit Guarantee Scheme for Co-lending for its share of loan to MSEs, even if the other MLI choose not to lodge the application for guarantee for its share of loans subject to the lodging MLI being contact point for CGTMSE for lodgment of guarantee application payment of guarantee fee, initiation of legal action and lodgment of claim if the a/c turns into NPA. 4. **Charging of Annual Guarantee Fee at lower rate & Higher Extent of Guarantee coverage to Social Category, Geographic & MSE Status of borrower under CGS III:** Following categories have been identified for additional concession / relaxation in guarantee fee & extent of guarantee cover. **Fee Relaxation to Social Category, Geographic & MSE Status of borrower** **Category** **Social Category (Weaker section / Underserved Section)** **Geographic** **MSE Status** ------------------------------------- ------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------------------------------------------------------- ---------------- Target Group Women / SC / ST / Person with disability (PwD) / Agniveers NER incl. Sikkim, UT of Jammu & Kashmir & UT of Ladakh (Upto ![http://10.1.46.147:9001/kmtnet/images/rupee.jpg](media/image1.jpeg)50 Lakh) / Aspirational District ZED Certified Relaxation / Concession in fee rate 10% 10% 10% An MSE falling in all the above three categories viz. Social, Geographic, MSE Status shall be eligible for maximum discount of 30% on standard rate. **Extent of Guarantee Cover (For Secured & Unsecured Credit Facility)** **Category (including Trading activity)** **Maximum extent of Guarantee Coverage (where guaranteed credit facility is)** ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------------------------------------- **Up to 5 lakh** **Above** http://10.1.46.147:9001/kmtnet/images/rupee.jpg**5 lakh & up to** ![http://10.1.46.147:9001/kmtnet/images/rupee.jpg](media/image1.jpeg)**50 lakh** **Above** http://10.1.46.147:9001/kmtnet/images/rupee.jpg**50 lakh & up to** ![http://10.1.46.147:9001/kmtnet/images/rupee.jpg](media/image1.jpeg)**500 lakh** Micro Enterprises 85% 75% 75% MSEs located in North East Region (incl. Sikkim, UT of Jammu & Kashmir and UT of Ladakh) 80% Women entrepreneurs / SC / ST entrepreneurs / MSEs situated in Aspirational District / ZED certified MSEs / Person with Disability (PwD) / MSE promoted by Agniveers 85% All other category of borrowers 75% The above modification shall be applicable for all the loans sanctioned on or after January 01, 2024. All other terms and conditions and operational guidelines will be as per the CGS-I Scheme. **[CREDIT GUARANTEE SCHEME FOR SUBORDINATE DEBT FOR STRESSED MSMEs ]** ================================================================================== (Ref. CGTMSE Circular No.10 dated 20.04.2022) With the introduction of Distressed Assets Fund-Subordinate Debt for Stressed MSMEs by Govt. of India, **CGTMSE** has launched the scheme called **Credit Guarantee Scheme for Subordinated Debt (CGSSD),** under which guarantee coverage would be provided to Schedule Commercial Banks which are member lending institutions (MLIs) of CGTMSE for facilitating support to stressed MSMEs. - **"Distressed Assets Fund"**is a corpus fund of Rs 4000 crore created by Government of India for providing guarantee coverage to the loans given/ credit extended to the promoters of the eligible MSME units under the scheme. - **"Subordinate Debt"** means credit facility extended to the Promoter(s) of the Stressed Units for infusion in the units as Equity including Quasi Equity/Sub-Debt. **DURATION OF THE SCHEME:** The Scheme would be applicable to all credit facilities sanctioned under CGSSD for a maximum period of **10 years** from the guarantee availment date or March 31, 2021 whichever is earlier, or till an amount of Rs 20,000 crore of guarantee amount is approved. **PURPOSE:** To provide guarantee coverage for the CGSSD to provide Sub-Debt support in respect of restructuring of MSMEs. 90% guarantee coverage would come from scheme/ Trust and remaining 10% from the concerned promoter(s). The scheme will provide personal loan through banks to the promoters of stressed MSMEs for infusion as equity /quasi equity in the business eligible for restructuring, as per RBI guidelines for restructuring of stressed MSME advances. **ELIGIBLE BORROWER:** Promoters of MSME units which are stressed, viz.**SMA-2, and NPA accounts as on 30.04.2020** and can become commercially viable asper the assessment of the lending institutions. The Scheme is applicable for those MSMEs whose accounts have been standard as on 01.01.2016 and have been in regular operations, either as standard accounts, or as NPA accounts during financial year 2018-19 and 2019-20. However, fraud accounts and wilful defaulters will not be considered under the proposed scheme. In cases where recovery proceedings are underway and banks assess that with the facilities provided under the scheme the account would be viable, the banks shall withdraw the recovery proceedings before going ahead with restructuring. **MAXIMUM AMOUNT OF SUB-DEBT FACILITY:** **Up to 50% of promoter's stake (as equity / debt) or Rs. 75 lakh whichever is lower** as per last audited Balance Sheet. This personal loan **shall not exceed the original debt of the beneficiary**. Any guarantee approved under this scheme shall be over and above the existing loan/ guarantee sanctioned by the trust (over and above the eligible limit of Rs.200 lakh under CGTMSE). In case a borrower has existing limits with more than one lender, the CGSSD can be availed by the borrower through one lender only. A declaration from the borrower regarding its other banking arrangements and that it has not availed funding under the scheme from the other lenders to be obtained by the lending MLI.MLI should ensure that the sub-debt /credit released to the promoter is brought back as equity/quasi equity/sub-debt in the MSME unit. **GUARANTEE COVER:** The guarantee cover would be uncapped, unconditional and irrevocable credit guarantee. Maximum cover available per eligible borrower of the amount in default under this scheme is 90% guarantee coverage from scheme/ Trust and remaining 10% from the concerned promoter. **PROMOTERS MARGIN:** The promoters are required to bring in 10% of the sub-debt amount as collateral. **AMOUNT IN DEFAULT:** The principal and interest amount outstanding in the account(s) of the borrower in respect of Sub-debt facility as on the date of the account becoming NPA, or the date of lodgement of claim whichever is lower. **MAXIMUM TENURE OF GUARANTEE COVER:** The maximum tenure of the guarantee cover would be the tenure of the Sub-debt facility sanctioned by lending institution on the basis the assessment of debt serviceability or for a maximum period of 10 years from the guarantee availment date or 31^st^ March 2021 whichever is earlier. **REPAYMENT PERIOD OF SUB-DEBT:** The maximum tenor for repayment will be 10 years. There will be a moratorium of maximum 7years on the payment of principal. Till the 7th year, only interest will be paid. The principal shall be repaid within a maximum of 3years after completion of moratorium. Interest to be serviced regularly at monthly intervals. **RATE OF INTEREST:**As per RBI guidelines, all loans to MSMEs must be benchmarked to one of the external benchmark rates. Banks are free to decide the spread over the external benchmark as per their approved policies. **SECURITY:** The sub-debt facility so sanctioned by MLIs will have 2nd charge of the assets financed under existing facilities for the entire tenor of the sub-debt facility. **GUARANTEE FEES:** **1.50% per annum** on the guaranteed amount on outstanding basis. The guarantee service fee once paid by the lending institution to the Trust is non-refundable. **INVOCATION OF GUARANTEE:** - The Member Lending Institutions (MLIs) are required to inform the date on which the account was classified as NPA within 90 days of the account being classified as NPA and mark a particular case as NPA in CGTMSE online portal within next quarter from the time it becomes NPA. - The Trust shall pay 75 per cent of the guaranteed amount on preferring of eligible claim by the lending institution, within 30 days, subject to the claim being otherwise found in order and complete in all respects. The balance 25 per cent of the guaranteed amount will be paid on conclusion of recovery proceedings or till the decree gets time barred whichever is earlier. - Post invocation of the guarantee claims, if any recoveries are made, MLIs shall first adjust such recoveries towards the legal costs incurred by them for recovery of the amount and their outstanding amount. Any amount recovered beyond that then shall be provided to trust up to the extent of amount of claim settled by the trust. **APPLICATION FOR GUARANTEE COVER BY MLI:** Once the lending institution sanctions the Sub-debt facility, the lending institution is required to apply to the trust for guarantee coverage for the facility sanctioned. Only after the trust approval, the sub-debt scheme will be under the special window of the trust for the said scheme. **[CREDIT GUARANTEE SCHEME FOR STARTUPS (CGSS):] (BY NCGTC)** **Govt. of India through Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry vide Gazette notification dated 6^th^ October 2022 has introduced the Credit Guarantee Scheme for Startups to provide guarantee coverage to member lending institutions for the funding provided by them to Start-ups. The scheme guidelines are hereunder;** **TRUST OR FUND: Credit Guarantee Fund for Startups (CGFS) proposed to be set up by Government of India with the purpose of guaranteeing payment against default in loans or debt extended to eligible borrowers by eligible Member Institutions, managed by the Board of National Credit Guarantee Trustee Company Limited (NCGTC) as the Trustee of the Fund.** **ELIGIBLE BORROWER: An entity to borrow under this scheme shall be Startups that have reached stage of stable revenue stream, as assessed from audited monthly statements over a 12 month period, amenable to debt financing, and Startup not in default to any lending/investing institution and not classified as Non-Performing Asset.** **ELIGIBLE LENDING/INVESTING INSTITUTIONS: Scheduled Commercial Banks and Financial Institutions,** **RBI registered NBFCs having a rating of BBB and above as rated by external credit rating agencies accredited by RBI and having minimum networth of Rs. 100 crore, SEBI registered Alternative Investment Funds (AIFs).** **TYPES OF GUARANTEE COVER: There are two types of guarantee covers available under this scheme i.e Transaction based Guarantee Cover (guarantee cover on single eligible borrower basis) and Umbrella based Guarantee Cover (guarantee cover obtained by the lending/investing institution for a group of eligible borrowers).** **AIFs shall not be eligible to avail transaction based guarantee cover under the scheme.** **GUARANTEE FEE:** **For transaction based guarantee cover: Member Institution shall pay Annual Guarantee Fee (AGF) of 2% p.a. (1.50% p.a in case of units from the North East region as well as those of women entrepreneurs) of the disbursement/outstanding amount (on sanction amount, in case of working capital facility and non-fund based facility) as on the date of application of guarantee cover, upfront to the Trust within 30 days from the date of Credit Guarantee Demand Advice Note (CGDAN) of guarantee fee.** **For renewal of guarantee cover at the beginning of the year, the AGF shall be paid by the MI within 30 days i.e. on or before April 30, of every year.** **Further, in case the outstanding NPAs of that MI as a ratio of outstanding under the scheme as per last Management Certificate exceeds 10%, additional risk premium of 0.25% p.a. shall be charged on future guarantee covers and in case the outstanding NPAs of that MI as a ratio of outstanding under the scheme as per last Management Certificate exceeds 15%, additional risk premium of 0.5% p.a. & 0.75% p.a for over 20% shall be charged on future guarantee covers.** **For umbrella-based guarantee cover:** **Member Institution shall pay Guarantee Fee in the form of Annual Commitment Charge (ACC) of 0.15% p.a. of the proposed Pooled Investment in Startups upfront to the Trust within 30 days from the date of Credit Guarantee Demand Advice Note (CGDAN) of Commitment Charge. The MI shall pay the balance Guarantee Fee (commitment charges) from time to time in case the Pooled Investment amount in Startups is higher than what was proposed initially.** **All subsequent ACCs would be calculated on the same basis i.e. 0.15% of the Pooled Investment in Startups of Venture Debt Fund (VDF) and for renewal of guarantee cover, MIs shall pay the ACC within 30 days i.e. on or before April 30, of every year till the end of life cycle of VDF.** **MI shall pay 1% of the Pooled Investment in Startups as one-time guarantee fees, at the time of invocation of Guarantee claim/admission of claim file. In case no claim is preferred by the MI, it shall pay 0.25% of the Pooled Investment in Startups as guarantee closure charges within 30 days of the date of closure of VDF.** **In case of delay of payment beyond the periods stipulated above, the MI shall have to pay the same with penal charges of 4% above prevailing Repo Rate till the date of final payment.** **GUARANTEE COVER: Maximum guarantee cover per borrower shall not exceed Rs.10 crore.** **The credit facility being cove

Document Details

Tags

Related

Full Transcript

Upgrade to continue