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Introduction
At a meeting of the National Credit Council held in July 1968, it was emphasised that
commercial banks should increase their involvement in the financing of priority sectors,
viz., agriculture and small scale industries. The description of the priority sectors was
later formalised in 1972 on the basis of the report submitted by the Informal Study Group
on Statistics relating to advances to the Priority Sectors constituted by the Reserve Bank
in May 1971. On the basis of this report, the Reserve Bank prescribed a modified return
for reporting priority sector advances and certain guidelines were issued in this
connection indicating the scope of the items to be included under the various categories
of priority sector. Although initially there was no specific target fixed in respect of
priority sector lending, in November 1974 the banks were advised to raise the share of
these sectors in their aggregate advances to the level of 33 1/3 percent by March 1979.
At a meeting of the Union Finance Minister with the Chief Executive Officers of publicsector banks held in March 1980, it was agreed that banks should aim at raising the
proportion of their advances to priority sector to 40 percent by March 1985.
Subsequently, on the basis of the recommendations of the Working Group on the
Modalities of Implementation of Priority Sector Lending and the Twenty Point Economic
Programme by Banks (Chairman: Dr. K. S. Krishnaswamy), all commercial banks were
advised to achieve the target of priority sector lending at 40 percent of aggregate bank
advances by 1985. Sub-targets were also specified for lending to agriculture and the
weaker sections within the priority sector. Since then, there have been several changes in
the scope of priority sector lending and the targets and sub-targets applicable to various
bank groups.
The guidelines were last revised in the year 2007 based on the recommendations made in
September 2005 by the Internal Working Group of the RBI (Chairman: Shri C. S.
Murthy). The Sub-Committee of the Central Board of the Reserve Bank (Chairman: Shri
Y. H. Malegam) constituted to study issues and concerns in the Micro Finance
institutions (MFI) sector, inter alia, had recommended review of the guidelines on
priority sector lending.
Accordingly, Reserve Bank of India in August 2011 set up a Committee to re-examine
the existing classification and suggest revised guidelines with regard to Priority Sector
lending classification and related issues (Chairman: M V Nair). The recommendations of
the committee were placed in the public domain inviting public comments. The
suggestions were also examined vis-a-vis the comments received from various stake
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holders. Based on the above and with a view to simplify the norms the following
guidelines are laid down.
I. Categories under priority sector
(i) Agriculture
(ii) Micro and Small Enterprises
(iii) Education
(iv) Housing
(v) Export Credit
(vi) Others
The eligible activities under the above categories are specified in paragraph III
II. Targets /Sub-targets for Priority sector
Categories Domestic commercial banks / Foreign banks
with 20 and above branches
Foreign banks
with less than 20
branches
Total Priority
Sector
40 percent of Adjusted Net Bank Credit [ANBC
defined in sub paragraph (iii) below] or credit
equivalent amount of Off-Balance Sheet
Exposure, whichever is higher.
32 percent of
ANBC or credit
equivalent amount
of Off-BalanceSheet Exposure,
whichever is higher.
Total
agriculture
18 percent of ANBC or credit equivalent
amount of Off-Balance Sheet Exposure,
whichever is higher.
Of this, indirect lending in excess of 4.5% of
ANBC or credit equivalent amount of Off-
Balance Sheet Exposure, whichever is higher,
will not be reckoned for computing achievement
under 18 percent target. However, allagricultural loans under the categories 'direct'
and 'indirect' will be reckoned in computing
achievement under the overall priority sector
target of 40 percent of ANBC or credit
equivalent amount of Off-Balance Sheet
Exposure, whichever is higher.
No specific target.
Forms part of total
priority sector
target.
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Micro & Small
Enterprises
(MSE)
(i) Advances to micro and small enterprises
sector will be reckoned in computing
achievement under the overall priority sector
target of 40 percent of ANBC or creditequivalent amount of Off-Balance Sheet
Exposure, whichever is higher.
(ii) 40 percent of total advances to micro and
small enterprises sector should go to Micro
(manufacturing) enterprises having investment
in plant and machinery up to 5 lakh and micro
(service) enterprises having investment in
equipment up to 2 lakh;
(ii) 20 percent of total advances to micro and
small enterprises sector should go to Micro(manufacturing) enterprises with investment in
plant and machinery above 5 lakh and up to 25
lakh, and micro (service) enterprises with
investment in equipment above 2 lakh and up to
10 lakh
No specific target.
Forms part of total
priority sector
target.
Export Credit Export credit is not a separate category. Export
credit to eligible activities under agriculture and
MSE will be reckoned for priority sector lending
under respective categories.
No specific target.
Forms part of total
priority sector
target.
Advances toWeaker
Sections
10 percent of ANBC or credit equivalentamount of Off-Balance Sheet Exposure,
whichever is higher.
No specific target inthe total priority
sector target.
No specific target in the total priority sector target.
(ii) For foreign banks with 20 and above branches, priority sector targets and sub-targets
have to be achieved within a maximum period of five years starting from April 1, 2013
and ending on March 31, 2018. Foreign banks with 20 and above branches will submit an
action plan latest by December 31, 2012 for achieving the targets over a specific timeframe to be approved by RBI. Any subsequent reference to these banks in the circular,
will be in accordance to the approved plans.
(iii) The current years targets for priority sectors and sub-targets will be computed based
on Adjusted Net Bank Credit (ANBC) or credit equivalent of Off-Balance Sheet
Exposures of preceding March 31st. The outstanding priority sector loans as on March
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31st of the current year will be reckoned for achievement of priority sector targets and
sub-targets. For the purpose of priority sector lending, ANBC denotes the outstanding
Bank Credit in India [(As prescribed in item No.VI of Form A (Special Return as on
March 31st) under Section 42 (2) of the RBI Act, 1934] minus bills rediscounted with
RBI and other approved Financial Institutions plus permitted non SLR investments inHeld to Maturity (HTM) category plus investments in other categories, which are eligible
to be treated as part of priority sector lending (eg. investments in securitised assets).
Deposits placed by banks with NABARD/SIDBI/NHB, as the case may be, in lieu of
non-achievement of priority sector lending targets/sub-targets, though shown under
Schedule 8 'Investments' in the Balance Sheet at item I (vi) 'Others', will not be
reckoned for ANBC computation. For the purpose of calculation of credit equivalent of
off-balance sheet exposures, banks may be guided by the master circular on exposure
norms issued by our Department of Banking Operations and Development.
Computation of Adjusted Net Bank Credit
Bank Credit in India (As prescribed in item No.VI of Form A (Special Return as on
March 31st) under Section 42 (2) of the RBI Act, 1934.
I
Bills Rediscounted with RBI and other approved Financial Institutions
II
Net Bank Credit (NBC)*
III(I-II)
Investments in Non-SLR categories under HTM category + other investments eligible to
be treated as priority sector.
IV
ANBC
III+IV
* For the purpose of priority sector only. Banks should not deduct / net any amount like
provisions, accrued interest, etc. from NBC.
It has been observed that some banks are subtracting prudential write off at
Corporate/Head Office level while reporting Bank Credit as above. In such cases it must
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be ensured that bank credit to priority sector and all other sub-sectors so written off
should also be subtracted category wise from priority sector and sub-target achievement.
(iv) The targets for Micro Enterprises within the Micro and Small Enterprises segment
(MSE) will be computed with reference to the outstanding credit to MSE as on preceding
March 31st.
III Description of the Categories under priority sector
1. Agriculture
1.1 Direct Agriculture
Bank loans to following entities would also qualify for lending to direct agriculture:-
Loans to corporates including farmers' producer companies of individual farmers,
partnership firms and co-operatives of farmers directly engaged in Agriculture and Allied
Activities, viz., dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture (up
to cocoon stage) up to an aggregate limit of 2 crore per borrower for the following
purposes.
(i) Short-term loans for raising crops, i.e. for crop loans.
This will include traditional/non-traditional plantations, horticulture and allied activities.
(ii) Medium & long-term loans for agriculture and allied activities (e.g. purchase of
agricultural implements and machinery, loans for irrigation and other developmental
activities undertaken in the farm, and development loans for allied activities).
(iii) Loans for pre-harvest and post-harvest activities, viz., spraying, weeding, harvesting,
grading and sorting.
(iv) Export credit for exporting their own farm produce.
[Effect on July 20, 2012 circular: A new sub paragraph under Paragraph (III) (1.1) gets
added]
1.2 Indirect Agriculture
If the aggregate loan limit per borrower is more than 2 crore in respect of para 1.1 above,
the entire loan should be treated as indirect finance to agriculture.
[Effect on July 20, 2012 circular: Paragraphs (III) (1.2.1) (i), (ii), (iii), (v) and (vi) would
stand amended accordingly]
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2. Micro and Small Enterprises (Service Sector)
Bank loans to Micro and Small Enterprises (MSE) engaged in providing or rendering of
services will be eligible for classification as direct finance to MSE Sector under priority
sector upto an aggregate loan limit of 2 crore per borrower/unit, provided they satisfy the
investment criteria for equipment as defined under MSMED Act, 2006.
[Effect on July 20, 2012 circular: Paragraph (III) (2) (2.1.2) would stand amended
accordingly]
3. Housing
(i) Bank loans to any governmental agency for construction of dwelling units or for slum
clearance and rehabilitation of slum dwellers subject to a ceiling of 10 lakh per dwelling
unit.
(ii) Loans sanctioned by banks for housing projects exclusively for the purpose of
construction of houses only to economically weaker sections and low income groups, the
total cost of which does not exceed 10 lakh per dwelling unit, will qualify for priority
sector status. For the purpose of identifying the economically weaker sections and low
income groups, the family income limit of 1,20,000 per annum, irrespective of location,
is prescribed.
[Effect on July 20, 2012 circular: Paragraph (III) (4) (iii) & (iv) would stand amended
accordingly]
(iii) Bank loans to Housing Finance Companies (HFCs), approved by NHB for their
refinance, for on-lending for the purpose of purchase/construction/reconstruction of
individual dwelling units or for slum clearance and rehabilitation of slum dwellers,
subject to an aggregate loan limit of 10 lakh per borrower, provided the all inclusive
interest rate charged to the ultimate borrower is not exceeding lowest lending rate of the
lending bank for housing loans plus two percent per annum.
(iv) The eligibility under priority sector loans to HFCs is restricted to five percent of the
individual banks total priority sector lending, on an ongoing basis. The maturity of bankloans should be co-terminus with average maturity of loans extended by HFCs. Banks
should maintain necessary borrower-wise details of the underlying portfolio.
[Effect on July 20, 2012 circular: A new sub paragraph under Paragraph (III) (4) gets
added]
4. It is also clarified that:-
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(i) The investments in non-SLR securities, under HTM category for computation of
ANBC will include only non-SLR bonds/debentures.
(ii) Off-balance sheet interbank exposures are excluded for computing Credit Equivalent
of Off -Balance Sheet Exposures for the priority sector targets.
(iii) The term all inclusive interest includes interest (effective annual interest),
processing fees and service charges.
(iv) Banks should ensure that loans extended under priority sector are for approved
purposes and the end use is continuously monitored. The banks should put in place
proper internal controls and systems in this regard.
2. Micro and small enterprises
The limits for investment in plant and machinery/equipment for manufacturing / serviceenterprise, as notified by Ministry of Micro Small and Medium Enterprises, vide,
S.O.1642(E) dated September 29, 2006 are as under:-
Manufacturing sector
Enterprises
Investment in plant and machinery
Micro Enterprises
Do not exceed twenty five lakh rupees
Small Enterprises
More than twenty five lakh rupees but does not exceed five crore rupees
Service Sector
Enterprises
Investment in equipment
Micro Enterprises
Does not exceed ten lakh rupees
Small Enterprises
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More than ten lakh rupees but does not exceed two crore rupees
Bank loans to micro and small enterprises both manufacturing and service are eligible to
be classified under priority sector as per the following:
2.1. Direct Finance
2.1.1. Manufacturing Enterprises
The Micro and Small enterprises engaged in the manufacture or production of goods to
any industry specified in the first schedule to the Industries (Development and regulation)
Act, 1951. The manufacturing enterprises are defined in terms of investment in plant and
machinery.
2.1.1.1. Loans for food and agro processing
Loans for food and agro processing will be classified under Micro and Small Enterprises,
provided the units satisfy investments criteria prescribed for Micro and Small Enterprises,
as provided in MSMED Act, 2006.
2.1.2. Service Enterprises
Bank loans up to 1 crore per unit to Micro and Small Enterprises engaged in providing or
rendering of services and defined in terms of investment in equipment under MSMED
Act, 2006.
2.1.3. Export credit to MSE units (both manufacturing and services) for exporting of
goods/services produced by them.
2.1.4. Khadi and Village Industries Sector (KVI)
All loans sanctioned to units in the KVI sector, irrespective of their size of operations,
location and amount of original investment in plant and machinery. Such loans will be
eligible for classification under the sub-target of 60 percent prescribed for micro
enterprises within the micro and small enterprises segment under priority sector.
2.2. Indirect Finance
(i) Loans to persons involved in assisting the decentralised sector in the supply of inputs
to and marketing of outputs of artisans, village and cottage industries.
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(ii) Loans to cooperatives of producers in the decentralised sector viz. artisans village and
cottage industries.
(iii) Loans sanctioned by banks to MFIs for on-lending to MSE sector as per the
conditions specified in paragraph VIII of this circular.
3. Education
Loans to individuals for educational purposes including vocational courses upto
10 lakh for studies in India and
20 lakh for studies abroad.
4. Housing
(i) Loans to individuals up to 25 lakh in metropolitan centres with population above tenlakh and 15 lakh in other centres for purchase/construction of a dwelling unit per family
excluding loans sanctioned to banks own employees.
(ii) Loans for repairs to the damaged dwelling units of families up to 2 lakh in rural and
semi- urban areas and up to 5 lakh in urban and metropolitan areas.
(iii) Bank loans to any governmental agency for construction of dwelling units or for
slum clearance and rehabilitation of slum dwellers subject to a ceiling of 5 lakh per
dwelling unit.
(iv) The loans sanctioned by banks for housing projects exclusively for the purpose of
construction of houses only to economically weaker sections and low income groups, the
total cost of which do not exceed
5 lakh per dwelling unit. For the purpose of identifying the economically weaker sections
and low income groups, the family income limit of 1,20,000 per annum, irrespective of
the location, is prescribed.
5. Export Credit
Export Credit extended by foreign banks with less than 20 branches will be reckoned for
priority sector target achievement.
As regards the domestic banks and foreign banks with 20 and above branches, export
credit is not a separate category under priority sector. Export credit mentioned under
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paragraphs (III) (1.1) (ix), (III) (1.2.1) (v) and (III) (2.1.3) of this circular will count
towards the respective categories of priority sector, i.e. Agriculture and MSE sector.
6. Others
6.1. Loans, not exceeding 50,000 per borrower provided directly by banks to individualsand their SHG/JLG, provided the borrowers household annual income in rural areas does
not exceed 60,000/- and for non-rural areas it should not exceed 1,20,000/-.
6.2. Loans to distressed persons [other than farmers-already included under III (1.1) (vi)]
not exceeding 50,000 per borrower to prepay their debt to non-institutional lenders.
6.3. Loans outstanding under loans for general purposes under General Credit Cards
(GCC). If the loans under GCC are sanctioned to Micro and Small Enterprises, such loans
should be classified under respective categories of Micro and Small Enterprises.
6.4. Overdrafts, up to
50,000 (per account), granted against 'no-frills' / basic banking / savings accounts
provided the borrowers household annual income in rural areas does not exceed 60,000/-
and for non-rural areas it should not exceed 1,20,000/-.
6.5. Loans sanctioned to State Sponsored Organisations for Scheduled Castes/ Scheduled
Tribes for the specific purpose of purchase and supply of inputs to and/or the marketing
of the outputs of the beneficiaries of these organisations.
6.6. Loans sanctioned by banks directly to individuals for setting up off-grid solar and
other off-grid renewable energy solutions for households.
IV Weaker Sections
Priority sector loans to the following borrowers will be considered under Weaker
Sections category:-
(a) Small and marginal farmers;
(b) Artisans, village and cottage industries where individual credit limits do not exceed
50,000;
(c) Beneficiaries of Swarnjayanti Gram Swarozgar Yojana (SGSY), now National Rural
Livelihood Mission (NRLM);
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(d) Scheduled Castes and Scheduled Tribes;
(e) Beneficiaries of Differential Rate of Interest (DRI) scheme;
(f) Beneficiaries under Swarna Jayanti Shahari Rozgar Yojana (SJSRY);
(g) Beneficiaries under the Scheme for Rehabilitation of Manual Scavengers (SRMS);
(h) Loans to Self Help Groups;
(i) Loans to distressed farmers indebted to non-institutional lenders;
(j) Loans to distressed persons other than farmers not exceeding
50,000 per borrower to prepay their debt to non-institutional lenders;
(k) Loans to individual women beneficiaries upto
50,000 per borrower;
(l) Loans sanctioned under (a) to (k) above to persons from minority communities as may
be notified by Government of India from time to time.
In States, where one of the minority communities notified is, in fact, in majority, item (l)
will cover only the other notified minorities. These States/Union Territories are Jammu &
Kashmir, Punjab, Meghalaya, Mizoram, Nagaland and Lakshadweep.
V. Investments by banks in securitised assets
(i) Investments by banks in securitised assets, representing loans to various categories of
priority sector, except 'others' category, are eligible for classification under respective
categories of priority sector (direct or indirect) depending on the underlying assets
provided:
(a) the securitised assets are originated by banks and financial institutions and are eligible
to be classified as priority sector advances prior to securitisation and fulfil the Reserve
Bank of India guidelines on securitisation.
(b) the all inclusive interest charged to the ultimate borrower by the originating entity
should not exceed the Base Rate of the investing bank plus 8 percent per annum.
The investments in securitised assets originated by MFIs, which comply with the
guidelines in Paragraph VIII of this circular are exempted from this interest cap as there
are separate caps on margin and interest rate.
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(ii) Investments made by banks in securitised assets originated by NBFCs, where the
underlying assets are loans against gold jewellery, are not eligible for priority sector
status.
VI. Transfer of Assets through Direct Assignment /Outright purchases
(i) Assignments/Outright purchases of pool of assets by banks representing loans under
various categories of priority sector, except the 'others' category, will be eligible for
classification under respective categories of priority sector (direct or indirect) provided:
(a) the assets are originated by banks and financial institutions and are eligible to be
classified as priority sector advances prior to the purchase and fulfil the Reserve Bank of
India guidelines on outright purchase/assignment.
(b) the eligible loan assets so purchased should not be disposed of other than by way of
repayment.
(c) The all inclusive interest charged to the ultimate borrower by the originating entity
should not exceed the Base Rate of the purchasing bank plus 8 percent per annum.
The assignments/Outright purchases of eligible priority sector loans from MFIs, which
comply with the guidelines in Paragraph VIII of this circular are exempted from this
interest rate cap as there are separate caps on margin and interest rate.
(ii) When the banks undertake outright purchase of loan assets from banks/ financial
institutions to be classified under priority sector, they must report the nominal amountactually disbursed to end priority sector borrowers and not the premium embedded
amount paid to the sellers.
(iii) Purchase/ assignment transactions undertaken by banks with NBFCs, where the
underlying assets are loans against gold jewellery, are not eligible for priority sector
status.
VII. Inter Bank Participation Certificates bought by Banks
Inter Bank Participation Certificates (IBPCs) bought by banks, on a risk sharing basis,shall be eligible for classification under respective categories of priority sector, provided
the underlying assets are eligible to be categorized under the respective categories of
priority sector and the banks fulfill the Reserve Bank guidelines on IBPCs.
VIII. Bank loans to MFIs for on-lending
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a) Bank credit to MFIs extended on, or after, April 1, 2011 for on-lending to individuals
and also to members of SHGs / JLGs will be eligible for categorisation as priority sector
advance under respective categories viz., agriculture, micro and small enterprise, and
'others', as indirect finance, provided not less than 85% of total assets of MFI (other than
cash, balances with banks and financial institutions, government securities and moneymarket instruments) are in the nature of qualifying assets. In addition, aggregate
amount of loan, extended for income generating activity, is not less than 75% of the total
loans given by MFIs.
b) A qualifying asset shall mean a loan disbursed by MFI, which satisfies the following
criteria:
(i) The loan is to be extended to a borrower whose household annual income in rural
areas does not exceed
60,000/- while for non-rural areas it should not exceed
1,20,000/-.
(ii) Loan does not exceed
35,000/- in the first cycle and
50,000/- in the subsequent cycles
(iii) Total indebtedness of the borrower does not exceed
50,000/-.
(iv) Tenure of loan is not less than 24 months when loan amount exceeds
15,000/- with right to borrower of prepayment without penalty.
(v) The loan is without collateral.
(vi) Loan is repayable by weekly, fortnightly or monthly installments at the choice of the
borrower.
c) Further, the banks have to ensure that MFIs comply with the following caps on margin
and interest rate as also other pricing guidelines, to be eligible to classify these loans as
priority sector loans.
(i) Margin cap at 12% for all MFIs. The interest cost is to be calculated on average
fortnightly balances of outstanding borrowings and interest income is to be calculated on
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average fortnightly balances of outstanding loan portfolio of qualifying assets.
(ii) Interest cap on individual loans at 26% per annum for all MFIs to be calculated on a
reducing balance basis.
(iii) Only three components are to be included in pricing of loans viz., (a) a processing
fee not exceeding 1% of the gross loan amount, (b) the interest charge and (c) the
insurance premium.
(iv) The processing fee is not to be included in the margin cap or the interest cap of 26%.
(v) Only the actual cost of insurance i.e. actual cost of group insurance for life, health and
livestock for borrower and spouse can be recovered; administrative charges may be
recovered as per IRDA guidelines.
(vi) There should not be any penalty for delayed payment.
(vii) No Security Deposit/ Margin are to be taken.
d) The banks should obtain from MFI, at the end of each quarter, a Chartered
Accountants Certificate stating, inter-alia, that (i) 85% of total assets of the MFI are in
the nature of qualifying assets, (ii) the aggregate amount of loan, extended for income
generation activity, is not less than 75% of the total loans given by the MFIs, and (iii)
pricing guidelines are followed.
IX. Non-achievement of priority sector targets
Domestic scheduled commercial banks and foreign banks with branches 20 and above
having shortfall in lending to overall priority sector target/agriculture target and weaker
sections target shall be allocated amounts for contribution to the Rural Infrastructure
Development Fund (RIDF) established with NABARD or Funds with NHB/SIDBI/other
Financial Institutions, as specified by the Reserve Bank.
The foreign banks with less than 20 branches, which fail to achieve the priority sector
targets are required to contribute to funds with SIDBI or with other Financial Institutions,for such other purpose as may be stipulated by Reserve Bank of India from time to time.
For the purpose of allocation of RIDF tranche or any other Funds as decided by Reserve
Bank from time to time, the achievement levels of priority sector lending as on the March
31st will be taken into account. The deposits under the various Funds will be called upon
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by NABARD or such other Financial Institutions as and when required by them, after
giving one months notice to the banks concerned.
The interest rates on banks contribution to RIDF or any other Funds, periods of deposits,
etc. shall be fixed by Reserve Bank of India from time to time and will be communicated
to the concerned banks every year by the Reserve Bank at the time of operationalisation
of funds.
The misclassifications reported by the Reserve Banks Department of Banking
Supervision would be adjusted/ reduced from the achievement of that year, to which the
amount of declassification/ misclassification pertains, for allocation to various funds in
subsequent years.
Non-achievement of priority sector targets and sub-targets will be taken into account
while granting regulatory clearances/approvals for various purposes.
X. Priority Sector-Data Reporting System
The robust reporting system with granularity and system generation of priority sector data
is of utmost importance for proper monitoring and appropriate policy making. Separate
guidelines will be issued in due course.
XI. Common guidelines for priority sector loans
Banks should comply with the following common guidelines for all categories of
advances under the priority sector.
1. Rate of interest
The rates of interest on various categories of priority sector loans will be as per DBOD
directives issued from time to time.
2. Service charges
No loan related and adhoc service charges/inspection charges should be levied on priority
sector loans up to25,000.
3. Receipt, Sanction/Rejection/Disbursement Register
A register/ electronic record should be maintained by the bank, wherein the date of
receipt, sanction/rejection/disbursement with reasons thereof, etc., should be recorded.
The register/electronic record should be made available to all inspecting agencies.
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4. Issue of Acknowledgement of Loan Applications
Banks should provide acknowledgement for loan applications received under priority
sector loans. Bank Boards should prescribe a time limit within which the bank
communicates its decision in writing to the applicants.
XII. Amendments
These guidelines are subject to any instructions that may be issued by the RBI from time
to time.
XIII. Definitions
1. On-lending: Loans sanctioned by banks to eligible intermediaries for onward lending
only for creation of priority sector assets. The average maturity of priority sector assets
thus created should be co-terminus with maturity of the bank loan.
2. Small and Marginal Farmers: Farmers with landholding of up to 1 hectare is
considered as Marginal Farmers. Farmers with a landholding of more than 1 hectare but
less than 2 hectares are considered as Small Farmers. For the purpose of priority sector
loans small and marginal farmers include landless agricultural labourers, tenant farmers,
oral lessees and share-croppers, whose share of landholding is within above limits
prescribed for Small and Marginal Farmer.
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CREDIT GUARANTEE FUND SCHEME FOR
MICRO AND SMALL ENTERPRISES
CHAPTER I
INTRODUCTION
The Board of Trustees of Credit Guarantee Fund Trust for Small Industries,
having decided to frame a Scheme for the purpose of providing guarantees to a
substantial extent in respect of credit facilities to borrowers in Micro and Small
Enterprises, hereby make the following Scheme:
1. Title and date of commencement
(i) The Scheme shall be known as the Credit Guarantee Fund
Scheme for Small Industries (CGFSI)
(ii) It shall come into force from August 1, 2000.
(iii) It shall cover eligible credit facility extended by the lending
institutions to eligible borrowers effective June 1, 2000.
Subsequent to the enactment of MSMED Act-2006 the Trust was renamed as Credit
Guarantee Fund Trust for Micro and Small Enterprises and scheme as Credit
Guarantee Scheme for Micro and Small Enterprises.
2. Definitions
For the purposes of this Scheme -
(i) "Amount in Default" means the principal and interest amount
outstanding in the account(s) of the borrower in respect of term loan and
amount of outstanding working capital facilities (including interest), as on the
date of the account becoming NPA, or the date of lodgment of claim
application whichever is lower or such of the date as may be specified by
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CGTMSE for preferring any claim against the guarantee cover subject to a
maximum of amount Guaranteed.
(ii) "Collateral security" means the security provided in addition to the
primary security, in connection with the credit facility extended by a lending
institution to a borrower.
(iii) "Credit facility" means any financial assistance by way of term loan
and / or fund based and non-fund based working capital (e.g. Bank
Guarantee, Letter of credit etc) facilities extended by the lending institution to
the eligible borrower. For the purpose of calculation of guarantee fee, the
"credit facility extended" shall mean the amount of financial assistance
committed by the lending institution to the borrower, whether disbursed or not.
For the purpose of the calculation of service fee, the credit facility extended
shall mean the credit facilities (both fund and non-fund based) covered under
CGS and for which guarantee fee has been paid, as at March 31, of the
relevant year.
(iv) "Eligible borrower" means 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.
(v) 'Guarantee Cover' means maximum cover available per eligible
borrower of the amount in default in respect of the credit facility extended by
the lending institution.
(vi) "Lending institution(s)" means a commercial bank for the time being
included in the second Schedule to the Reserve Bank of India Act, 1934 and
Regional Rural Banks as may be specified by the Trust from time to time, or
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any other institution (s) as may be directed by the Govt. of India from time to
time. The Trust may, on review of performance, remove any of the lending
institution from the list of eligible institution.
(vii) "Material date" means the date on which the guarantee fee on the
amount covered in respect of eligible borrower becomes payable by the
eligible institution to the Trust.
(viii) "Non Performing Assets" means an asset classified as a nonperforming
based on the instructions and guidelines issued by the Reserve
Bank of India from time to time.
(ix) "Primary security" in respect of a credit facility shall mean the assets
created out of the credit facility so extended and/or existing unencumbered
assets which are directly associated with the project or business for which
the credit facility has been extended.
(x) "Prime Lending Rate" for a lending institution means the rate so
declared by that lending institution for the relevant time period / duration for
which the credit facility has been extended.
(xi) "Scheme" means the Credit Guarantee Fund Scheme for Micro and
Small Enterprises
(xii) "SIDBI" means the Small Industries Development Bank of India,
established under Small Industries Development Bank of India Act, 1989 (39
of 1989).
(xiii) 'Micro and Small Enterprises' As per the MSMED Act, 2006 an
"enterprise" means an industrial undertaking or a business concern or any
other establishment, by whatever name called, engaged in the manufacture
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or production of goods, in any manner, pertaining to any industry specified in
the First Schedule to the Industries (Development and Regulation) Act, 1951
or engaged in providing or rendering of any service or services; and "Micro
and Small Enterprises" are defined in 7.1.a.i) and ii) & in 7.1.b.i) and ii) of the
said Act .
(xiv) "Tenure of guarantee cover" means the maximum period of guarantee
cover from Guarantee start date which shall run through the agreed tenure
of the term credit and for a period of 5 years or block of a 5 years where
working capital facilities alone are extended or loan termination date, which
ever is earlier or such period as may be specified by the Trust.
(xv) "Trust" means the Credit Guarantee Fund Trust for Micro and Small
Enterprises set up by Government of India and SIDBI with the purpose of
guaranteeing credit facility (ies), extended by the lending institution(s) to the
eligible borrowers.
CHAPTER II
SCOPE AND EXTENT OF THE SCHEME
3. Guarantees by the Trust
(i.) Subject to the other provisions of the Scheme, the Trust undertakes,
in relation to credit facilities extended to an eligible borrower from time to time
by an eligible institution which has entered into the necessary agreement for
this purpose with the Trust, to provide a guarantee on account of the said
credit facilities.
(ii.) The Trust reserves the discretion to accept or reject any proposal
referred by the lending institution which otherwise satisfies the norms of the
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Scheme.
4. Credit facilities eligible under the Scheme:
The Trust shall cover credit facilities (Fund based and/or Non fund based)
extended by Member Lending Institution(s) to a single eligible borrower in the
Micro and Small Enterprises sector for credit facility (i) not exceeding Rs. 50 lakh
(Regional Rural Banks/Financial Institutions) and (ii) not exceeding Rs.100 lakh
(Scheduled Commercial Banks and select Financial Institutions) by way of term
loan and/or working capital facilities on or after entering into an agreement with
the Trust, without any collateral security and\or third party guarantees or such
amount as may be decided by the Trust from time to time.
Provided that the lending institution applies for guarantee cover in respect of
credit proposals sanctioned in the quarter April-June, July-September, October-
December and January-March prior to expiry of the following quarter viz. July-
September, October-December, January-March and April-June respectively
Provided further that, as on the material date
(i) The dues to the lending institution have not become
bad or doubtful of recovery; and / or
(ii) The business or activity of the borrower for which the
credit facility was granted has not ceased; and / or
(iii) The credit facility has not wholly or partly been utilised
for adjustment of any debts deemed bad or doubtful of recovery,
without obtaining a prior consent in this regard from the Trust.
Credit facilities extended by more than one bank and/or financial institution jointly
and/or separately to eligible borrower upto a maximum upto Rs.100 lakh per borrower
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subject to ceiling amount of individual MLI or such amount as may be specified by the
Trust.
5. Credit facilities not eligible under the Scheme
The following credit facilities shall not be eligible for being guaranteed under
the Scheme: -
(i) Any credit facility in respect of which risks are additionally covered
under a scheme operated / administered by Deposit Insurance and Credit
Guarantee Corporation or the Reserve Bank of India, to the extent they are
so covered.
(ii) Any credit facility in respect of which risks are additionally covered
by Government or by any general insurer or any other person or association
of persons carrying on the business of insurance, guarantee or indemnity, to
the extent they are so covered.
(iii) Any credit facility, which does not conform to, or is in any way
inconsistent with, the provisions of any law, or with any directives or
instructions issued by the Central Government or the Reserve Bank of India,
which may, for the time being, be in force.
(iv) Any credit facility granted to any borrower, who has availed himself
of any other credit facility covered under this scheme or under the schemes
mentioned in clause (i), (ii) and (iii) above, and where the lending institution
has invoked the guarantee provided by the Trust or under the schemes
mentioned in clause (i), (ii) and (iii) above, but has not repaid any portion of
the amount due to the Trust or under the schemes mentioned in clause (i),
(ii) and (iii) above, as the case may be, by reason of any default on the part
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of the borrower in respect of that credit facility.
(v) Any credit facility which has been sanctioned by the lending
institution against collateral security and / or third party guarantee.
(vi) Any credit facility which has been sanctioned by the lending
institution with interest rate more than 3% over the Prime Lending Rate
(PLR) of the lending institution.
6. Agreement to be executed by the lending institution
A lending institution shall not be entitled to a guarantee in respect of any eligible
credit facility granted by it unless it has entered into an agreement with the Trust in such
form as may be required by the Trust for covering by way of guarantee, under the
Scheme all the eligible credit facilities granted by the lending institution, for which
provision has been made in the Scheme.
7. Responsibilities of lending institution under the scheme:
(i) The lending institution shall evaluate credit applications by using
prudent banking judgement and shall use their business discretion / due
diligence in selecting commercially viable proposals and conduct the
account(s) of the borrowers with normal banking prudence.
(ii) The lending institution shall closely monitor the borrower account.
(iii) The lending institution shall safeguard the primary securities taken
from the borrower in respect of the credit facility in good and enforceable
condition.
(iv) The lending institution shall ensure that the guarantee claim in respect
of the credit facility and borrower is lodged with the Trust in the form and in
the manner and within such time as may be specified by the Trust in this
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behalf and that there shall not be any delay on its part to notify the default in
the borrowers account which shall result in the Trust facing higher guarantee
claims.
(v) 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 of the credit from the borrower. The
lending institution shall exercise all the necessary precautions and maintain
its recourse to the borrower for entire amount of credit facility owed by it and
initiate such necessary actions for recovery of the outstanding amount,
including such action as may be advised by the Trust.
(vi) The lending institution shall comply with such directions as may be
issued by the Trust, from time to time, for facilitating recoveries in the
guaranteed account, or safeguarding its interest as a guarantor, as the Trust
may deem fit and the lending institution shall be bound to comply with such
directions.
(vii) The lending institution shall, in respect of any guaranteed account,
exercise the same diligence in recovering the dues, and safeguarding the
interest of the Trust in all the ways open to it as it might have exercised in the
normal course if no guarantee had been furnished 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. In particular, the lending
institution should intimate the Trust while entering into any compromise or
arrangement, which may have effect of discharge or waiver of personal
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guarantee(s) or security. The lending institution shall also ensure either
through a stipulation in an agreement with the borrower or otherwise, that it
shall not create any charge on the security held in the account covered by the
guarantee for the benefit of any account not covered by the guarantee, with
itself or in favour of any other creditor(s) without intimating the Trust. Further
the lending institution shall secure for the Trust or its appointed agency,
through a stipulation in an agreement with the borrower or otherwise, the right
to list the defaulted borrowers' names and particulars on the Website of the
Trust
CHAPTER III
GUARANTEE FEE
8. Guarantee Fee and Annual Service Fee
(i) One-time guarantee fee at specified rate ((a)currently 1.00% in the
case of credit facility upto Rs. 5 Lakh and 1.5% in the case of credit facility
above Rs. 5 Lakh (b) 0.75%, in case of credit facilities upto Rs.50 lakh
sanctioned to units in North Eastern Region including State of Sikkim) of the
credit facility sanctioned (comprising term loan and / or working capital facility)
shall be paid upfront to the Trust by the institution availing of the guarantee
within 30 days from the date of first disbursement of credit facility (not
applicable for Working capital) or 30 days from the date of Demand Advice
(CGDAN) of guarantee fee whichever is later or such date as specified by
the Trust.
(ii) The annual service fee at specified rate (currently 0.50% in the case of
credit facility upto Rs. 5 Lakh and 0.75% in the case of credit facility above
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Rs. 5 Lakh) on pro-rata basis for the first and last year and in full for the
intervening years on the credit facility sanctioned (comprising term loan and
/ or working capital facility) shall be paid by the lending institution within 60
days ie. on or before May 31, of every year. In the event of non-payment of
annual service fee by May 31 of that year or any other specified date, the
guarantee under the scheme shall not be available to the lending institution
unless the Trust agrees for continuance of guarantee and the lending
institution pays penal interest on the service fee due and unpaid, with effect
from the subsequent June 01, at four per cent over Bank Rate, per annum, or
at such rates specified by the Trust from time to time, for the period of delay.
Provided further that in the event of non-payment of annual
service fee within the stipulated time or such extended time that
may be agreed to by the Trust on such terms, liability of the Trust
to guarantee such credit facility would lapse in respect of those
credit facility against which the service charges are due and not
paid,
Provided further that, the Trust may consider renewal of
guarantee cover for such of the credit facility upon such terms and
conditions as the Trust may decide.
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
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the Bank Rate, or as may be prescribed by the Trust from time to
time. Any amount found to have been paid in excess would be
refunded by the Trust. In the event of any representation made
by the lending institution in this regard, the Trust shall take a
decision based on the available information with it and the
clarifications received from the lending institution, and its decision
shall be final and binding on the lending institution.
(iii) The amount equivalent to the guarantee fee and / or the service fee
payable by the eligible lending institution may be recovered by it, at its
discretion from the eligible borrower.
The guarantee fee and / or annual service fee once paid by the lending institution to the
Trust is non-refundable. Guarantee fee / Annual Service Fee, shall not be refunded,
except under certain circumstances like -
(i) Excess remittance,
(ii) Remittance made more than once against the same credit application,
(iii) Guarantee fee & / or annual service fee not due,
(iv) Guarantee fee paid in advance but application not approved for
guarantee cover under the scheme, etc.
CHAPTER IV
GUARANTEES
9. Extent of the guarantee
The Trust shall provide guarantee as under :
Category Maximum extent of Guarantee where credit facility is
Upto Rs.5 lakh Above Rs.5
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lakh upto
Rs.50 lakh
Above Rs.50 lakh upto
Rs.100 lakh
Micro Enterprises 85% of the
amount in
default subject
to a maximum
of Rs.4.25 lakh
75% /
Rs.37.50 lakh
Rs.37.50 lakh plus
50% of amount in
default above Rs.50
lakh subject to overall
ceiling of Rs.62.50 lakh
Women entrepreneurs/
Units located in North
East Region (incl.
Sikkim) other than
credit facility upto
Rs.5 lakh to micro
enterprises
80% of the amount in default
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subject to a maximum of Rs.40
lakh
Rs.40 lakh plus 50% of
amount in default
above Rs.50 lakh
subject to overall
ceiling of Rs.65 lakh
All other category of
borrowers
75% /
Rs.37.50 lakh
Rs.37.50 lakh plus
50% of amount in
default above Rs.50
lakh subject to overall
ceiling of Rs.62.50 lakh
All proposals for sanction of guarantee approvals for credit facilities above Rs. 50 lakh
and upto Rs.100 lakh will have to be rated internally by the MLI and should be of
investment grade. Proposals approved by the MLIs on or after December 8, 2008 will be
eligible for the coverage upto Rs.100 lakh.
The guarantee cover will commence from the date of payment of guarantee fee and
shall run through the agreed tenure of the term credit in respect of term credit /
composite credit. Where working capital alone is extended to the eligible borrower, the
guarantee cover shall be for a period of 5 years or a block of 5 years, or for such period
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as may be specified by the trust in this behalf.
CHAPTER V
CLAIMS
10. Invocation of guarantee
(i) The lending institution may invoke the guarantee in respect of credit
facility within a maximum period of one year from date of NPA, if NPA is
after lock-in period or within one year of lock-in period, if NPA is within
lock-in period, if the following conditions are satisfied: -
a. The guarantee in respect of that credit facility was in force at the time of
account turning NPA.
b. The lock-in period of 18 months from either the date of last disbursement
of the loan to the borrower or the date of payment of the guarantee fee in
respect of credit facility to the borrower, whichever is later, has elapsed;
c. The amount due and payable to the lending institution in respect of the
credit facility has not been paid and the dues have been classified by the
lending institution as Non Performing Assets. Provided that the lending
institution shall not make or be entitled to make any claim on the Trust in
respect of the said credit facility if the loss in respect of the said credit
facility had occurred owing to actions / decisions taken contrary to or in
contravention of the guidelines issued by the Trust
d. The credit facility has been recalled and the 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
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advised to take further action as contained in Section 13 (4) of the above
Act wherein a secured creditor can take recourse to any one or more of
the recovery measures out of the four measures indicated therein before
submitting claims for first installment of guaranteed amount. In case the
MLI is not in a position to take any of the action indicated in Section 13(4)
of the aforesaid Act, they may initiate fresh recovery proceeding under
any other applicable law and seek the claim for first installment from the
Trust.
(rii) The claim should be preferred by the lending institution in such
manner and within such time as may be specified by the Trust in this behalf.
(iii) 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 to the lending institution interest on the eligible claim amount
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 by the lending institution. On a claim being paid, the
Trust shall be deemed to have been discharged from all its liabilities on
account of the guarantee in force in respect of the borrower concerned.
(iv) In the event of default the lending institution shall exercise its rights, if
any, to takeover the assets of the borrowers and the amount realised, 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.
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(v) 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 lodgement of the claim was more than
once or where there existed suppression of any material information on part
of the lending institutions for the settlement of claims. The lending institution
shall pay such penal interest, when demanded by the Trust, from the date of
the initial release of the claim by the Trust to the date of refund of the claim.
The Guarantee Claim received directly from the branches or offices other than
respective operating offices of MLIs will not be entertained.
11. Subrogation of rights and recoveries on account of claims paid
(i) The lending institution shall furnish to the Trust, the details of its
efforts for recovery, realisations and such other information as may be
demanded or required from time to time. The lending institution will hold lien
on assets created out of the credit facility extended to the borrower, on its
own behalf and on behalf of the Trust. The Trust shall not exercise any
subrogation rights and that the responsibility of the recovery of dues including
takeover of assets, sale of assets, etc., shall rest with the lending institution;
(ii) In the event of a borrower owing several distinct and separate debts to
the lending institution and making payments towards any one or more of the
same, whether the account towards which the payment is made is covered by
the guarantee of the Trust or not, such payments shall, for the purpose of this
clause, be deemed to have been appropriated by the lending institution to the
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debt covered by the guarantee and in respect of which a claim has been
preferred and paid, irrespective of the manner of appropriation indicated by
such borrower or the manner in which such payments are actually
appropriated.
(iii) 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.
CHAPTER VI
MISCELLANEOUS
12. Appropriation of amount received from the lending institutions
The amount received from the lending institutions shall be appropriated in the order in
which the service fee, penal interest and other charges have fallen due. If the service
fee and the penal interest have fallen due on the same date, then the appropriation shall
be made first towards service fee and then towards the penal interest and finally
towards any other charges payable in respect of the eligible credit facility.
13. Appropriation of amount realised by the lending institution in respect of a credit
facility after the guarantee has been invoked.
Where subsequent to the Trust having released a sum to the lending institution towards
the amount in default in accordance with the provisions contained in the Section 10 of
this scheme, the lending institution recovers money subsequent to the recovery
proceedings initiated by it, the same shall be deposited by the lending institution with
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the Trust, after adjusting towards the cost incurred by it for recovery of the amount. The
Trust shall appropriate the same first towards the pending service fee, penal interest,
and other charges due to the Trust, if any, in respect of the credit facility towards which
the amount has been recovered by the lending institution, and the balance, if any, shall
be appropriated in such a manner so that losses on account of deficit in recovery of the
credit facility between the Trust and the lending institution are in the proportion of 75% /
80% / 85% and 25% / 20% / 15% , respectively.
14. Trust's liability to be terminated in certain cases
(i)If the liabilities of a borrower to the lending institution on account of any
eligible credit facility guaranteed under this Scheme are transferred or assigned
to any other borrower and if the conditions as to the eligibility of the borrower and
the amount of the facility and any other terms and conditions, if any, subject to
which the credit facility can be guaranteed under the Scheme are not satisfied
after the said transfer or assignment, the guarantee in respect of the credit facility
shall be deemed to be terminated as from the date of the said transfer or
assignment.
(ii)If a borrower becomes ineligible for being granted any credit facilities
under the Scheme, by reason of cessation of his activity or his activity or his
undertaking ceasing to come within the definition of a MSE unit, the liability of the
Trust in respect of any credit facilities granted to him by a lending institution
under the Scheme shall be limited to the liability of the borrower to the lending
institution as on the date on which the borrower becomes so ineligible, subject,
however, to the limits on the liability of the Trust fixed under this Scheme.
However, notwithstanding the death or retirement of a partner where the
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borrower is a partnership firm or the death of one of the joint borrowers, if the
lending institution is entitled to continue the credit facilities to the surviving
partner or partners or the surviving borrower or borrowers, as the case may be
and if the credit facilities have not already become non performing asset, the
guarantee in respect of such credit facilities shall not to be deemed to be
terminated as provided in this paragraph.
15. Returns and Inspections
(i)The lending institution shall submit such statements and furnish such
information as the Trust may require in connection with any credit facility under
this Scheme.
(ii)The lending institution shall also furnish to the Trust all such documents,
receipts, certificates and other writings as the latter may require and shall be
deemed to have affirmed that the contents of such documents, receipts,
certificates and other writings are true, provided that no claim shall be rejected
and no liability shall attach to the lending institution or any officer thereof for
anything done in good faith.
(iii)The Trust shall, insofar as it may be necessary for the purposes of the
Scheme, have the right to inspect or call for copies of the books of account and
other records (including any book of instructions or manual or circulars covering
general instructions regarding conduct of advances) of the lending institution, and
of any borrower from the lending institution. Such inspection may be carried out
either through the officers of the Trust or of SIDBI (except in case of Institutions
other than SIDBI) or any other person appointed by the Trust for the purpose of
inspection. Every officer or other employee of the lending institution or the
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borrower, who is in a position to do so, shall make available to the officers of the
Trust or SIDBI or the person appointed for the inspection as the case may be, the
books of account and other records and information which are in his possession.
16. Conditions imposed under the Scheme to be binding on the lending institution
(i)Any guarantee given by the Trust shall be governed by the provisions of
the Scheme as if the same had been written in the documents evidencing such
guarantee.
(ii)The lending institution shall as far as possible ensure that the conditions of
any contract relating to an account guaranteed under the Scheme are not in
conflict with the provisions of the Scheme but notwithstanding any provision in
any other document or contract, the lending institution shall in relation to the
Trust be bound by the conditions imposed under the Scheme.
17. Modifications and exemptions
(i)The Trust reserves to itself the right to modify, cancel or replace the
scheme so, however, that the rights or obligations arising out of, or accruing
under a guarantee issued under the Scheme up to the date on which such
modification, cancellation or replacement comes into effect, shall not be affected.
(ii)Notwithstanding anything herein contained, the Trust shall have a right to
alter the terms and conditions of the Scheme in regard to an account in respect
of which guarantee has not been invoked as on the date of such alteration.
(iii)In the event of the Scheme being cancelled, no claim shall lie against the
Trust in respect of facilities covered by the Scheme, unless the provisions
contained in Clause (i) and (ii) of Section 10 of the Scheme are complied with by
the lending institution prior to the date on which the cancellation comes into
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force.
18. Interpretation
If any question arises in regard to the interpretation of any of the provisions of the
Scheme or of any directions or instructions or clarifications given in connection
therewith, the decision of the Trust shall be final.
19. Supplementary and general provisions
In respect of any matter not specifically provided for in this Scheme, the Trust may
make such supplementary or additional provisions or issue such instructions or
clarifications as may be necessary for the purpose of the Scheme.
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