Credit Guarantee Scheme for Subordinate Debt (CGSSD)
Karur Vysya Bank has launched a new term loan facility under Credit Guarantee Scheme for Subordinate Debt (CGSSD) introduced by Ministry of Micro, Small and Medium Enterprises to our existing MSME borrowers who are facing stress in account due to present Covid-19 pandemic.
Salient features of the scheme:
|Particulars ||Details |
|Facility ||Term Loan |
|Purpose ||To provide personal loan 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 Borrowers || |
- Personal loan will be provided to the promoters of the MSME units. The MSME itself may be Proprietorship, Partnership, Private Limited Company or registered company etc.
- Micro, Small and Medium Enterprises (MSMEs) units are eligible under this scheme and as defined in the MSMED Act and amended from time to time. The latest amendment by Ministry of MSME is done vide Ref. No., S.O. 2119(E), dated 26th June, 2020
- Eligible borrower are the promoters of MSME units which are stressed, viz. SMA-2 and NPA accounts as on 30.04.2020 and can become commercially viable as per 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 financial year 2019-20
- The Scheme is valid for MSME units which are stressed, viz. SMA-2 and NPA accounts as on 30.04.2020 and are eligible for restructuring as per RBI guidelines on the books of the Lending institutions
- However, fraud accounts and willful defaulters will not be considered under the scheme.
|Tenor / Repayment || |
- The maximum tenor for repayment will be 10 years. There will be a moratorium of 7 years (maximum) on the payment of principal. Till the 7th year, only interest will be paid.
- While the interest on the sub-debt under the scheme would be required to be serviced regularly (monthly), the principal shall be repaid within a maximum of 3 years after completion of moratorium.
|Margin || |
- 10% (Promoters are required to bring in 10% of the sub-debt amount as collateral).
- Bank shall ensure availability of additional margin requirement if any to be brought by the promoters. Bank shall ensure the proposed activities are completed with the Bank Finance & Promoters margin.
|Security || The sub-debt facility sanctioned will have 2nd charge on the assets financed under existing facilities of the MSME units for the entire tenor of the sub-debt facility (Both Primary & Collateral Security). |
|Personal Guarantee ||All the existing guarantors shall continue for the proposed Loan. |
|Extent of Guarantee Coverage ||90% guarantee coverage would come from CGTMSE and remaining 10% from concerned promoter(s) on the credit extended by Bank under the scheme. The guarantee cover would be uncapped, unconditional and irrevocable credit guarantee. |
|Guarantee Fee || |
- 1.50% per annum on the guaranteed amount on outstanding basis.
- Guarantee fee may be borne by the borrowers as per the arrangements between the borrower and the Bank.
- The amount equivalent to the guarantee fee payable by the eligible lending institution may be recovered by it, at its discretion from the eligible borrower.
- The guarantee service fee once paid by the lending institution to the Trust is non-refundable. Guarantee service fee shall not be refunded, except under certain circumstances like:
- Excess remittance.
- Remittance made more than once against the same portfolio.
|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, 2023 whichever is earlier, or till an amount of Rs 20,000 crore of guarantee amount is approved. |