credit guarantee fund for micro units - ncgtcsurge.ncgtc.in/downloads/a guide to portfolio scheme-...

CREDIT GUARANTEE FUND FOR

MICRO UNITS

A Guide to Portfolio Scheme

NATIONAL CREDIT GUARANTEE TRUSTEE COMPANY LTD MSME Development Center, C-11, SIDBI, G Block, Bandra Kurla Complex, Bandra (E),

Mumbai 400051. Website: www.ncgtc.in Email Id: [email protected]

Second Edition

03, November, 2017

A Guide to Portfolio Scheme: CGFMU

Page 1 of 68

Preface [To Second Edition]

It has been more than eight months since we came out

with the First Edition of this Guide in the form of an e-book.

Since then we have seen rapid built up of portfolios under the

CGFMU scheme from different Member Lending Institutions

(MLIs) resulting in a cumulative guarantee exposure of more

than Rs.20,000 crore of sanctioned loans covering more than

20 lakh end-beneficiaries. We have also seen addition of new

MLIs and today the number of MLIs covered under CGFMU

stands at 52.

During this important phase of initial roll-out of the

Scheme we have also received very valuable inputs and suggestions on the Guide Book, as

also feedback on the general teething problems faced by MLIs while operating on the NCGTC-

SURGE (B2B) platform.

Based on the feedback and as part of our continuous effort to enable ease of

operations, we thought it fit to come out with an updated version of the e-book. Our intent

in this update is primarily to bring in more clarity on various operational aspects of the

Scheme, with an effort to charting out the ‘claim process’ in further detail. A new feature CG

Management (“Search, View & Update-CG”) has been added on the SURGE platform to

facilitate the MLIs for accessing information on individual guarantees using unique customer

wise search parameters.

To summarise and give a comprehensive perspective of the entire life cycle of the

portfolio, a separate section has been added in the e-book.

I am sure this updated version will serve as a single point of reference for MLIs and

improve operational ease.

We welcome your feedback/suggestions on the e-booklet- A guide to the Portfolio

Scheme at [email protected]

Vinay Hedaoo

Chief Executive Officer, NCGTC November 03, 2017

http://www.ncgtc.in/


Page 2 of 68

Preface to First Edition

As you are aware, the Pradhan Mantri Mudra Yogana

(PMMY) was launched by the Honourable Prime Minister on

April 08, 2015 and subsequently the credit guarantee

scheme was notified by the Govt. of India vide Gazette

notification dated 18th April, 2016. Under the arrangement,

the credit guarantee scheme under Credit Guarantee Fund

for Micro Units (CGFMU) is being operated by NCGTC.

This apart, NCGTC also operates other guarantee products,

like Credit Guarantee fund for Educational Loans (CGFEL),

Credit Guarantee Fund for Skill Development Loans (CGFSD), (Credit Guarantee Fund for

Stand Up India (CGFSI) & Credit Guarantee Fund for Factoring (CGFF).

The portfolio credit guarantee product is a new introduction in the Indian credit guarantee

eco-system and hence would require continuous engagement with MLIs during the initial

implementation phase. Keeping this in view, efforts have been made to constantly engage

with the MLIs through meetings, technical hand holding sessions and various other modes of

communication. NCGTC has also shared dedicated URL links wherein various scheme related

SOPs, have been made available. To further support the efforts, NCGTC has now put in place

an e-booklet which can serve as an end to end guide for operating officers.

I thank all the persons involved in the efforts. I would like to thank GOI, especially Department

of Financial Services (DFS), my fellow colleagues in SIDBI, MUDRA Ltd, all MLIs, NCGTC & all

those persons who have supported us in implementing the Scheme.

I am sure this e-booklet will achieve its intended goal and help the MLIs to seamlessly operate

the guarantee scheme on SURGE platform.

Pradeep Malgaonkar Chief Executive Officer, NCGTC

February 14, 2017



Page 3 of 68

Table of Contents Section A : General Information NCGTC & CGFMU ............................................................................. 4

1. About NCGTC ................................................................................................................................. 5

2. About Pradhan Mantri Mudra Yogana (PMMY) .......................................................................... 6

3. About Credit Guarantee Fund for Micro Units (CGFMU) ............................................................ 7

4. Highlights of Credit Guarantee Scheme ....................................................................................... 8

5. System for Undertaking, Re-assurance & Guarantee Endorsement (SURGE) ........................ 10

6. Typical Chronology of events in CG process/Activities involved ............................................ 11

Section B : Transactions in SURGE ..................................................................................................... 13

7. Enrollment of MLI on NCGTC B2B platform - SURGE (An on-line activity) ............................ 14

8. Portfolio Creation and Data upload on SURGE.......................................................................... 16

10. Credit Guarantee Fee ................................................................................................................ 25

11. Search, View & Update- Credit Guarantee(CG) ....................................................................... 27

12. Provision of Data updates (post crystallization of the Portfolio) .......................................... 30

Section C : Claims & Recoveries ......................................................................................................... 31

13. Provision for Claims Request ................................................................................................... 32

14. Interim Claim pay-out ............................................................................................................... 33

15. End of the life of the Portfolio .................................................................................................. 34

16. Final Claim Pay-out ................................................................................................................... 35

17. Post Claim Receipt ..................................................................................................................... 39

18. Detailed Illustration .................................................................................................................. 40

19. Treatment of recovery proceeds on SURGE ............................................................................ 42

Section D : Comprehensive Overview- Portfolio Lifecycle ............................................................... 43

20. Snap-shot of the Portfolio life-cycle activities ........................................................................ 44

21. Stage wise Check List for MLIs ................................................................................................ 45

Section E : APPENDIX .......................................................................................................................... 46

22. Appendix 1 - Undertaking format – MLI Registration ............................................................ 47

23. Appendix 2 - Single Point of Contact (SPOC) form ................................................................. 52

24. Appendix 3 - Eligibility Checks for Guiding MLI (One Pager) ................................................ 54

25. Appendix 4 - Management Certificate ..................................................................................... 56

26. Appendix 5 - Gazette Notification –Scheme dated April 18, 2016 ........................................ 58



Page 4 of 68

Section A General Information NCGTC & CGFMU



Page 5 of 68

National Credit Guarantee Trustee Company Ltd (NCGTC) has been conceptualized with an objective to act as trustee and operate the various credit guarantee funds set up/ being set up/ to be set up by GoI, other national or international bodies etc, including the trustee for Credit Guarantee Fund for Micro Units (CGFMU).

It has been incorporated under the Indian Companies Act, 1956 on March 28, 2014 and it has been

set up by Govt. of India, with its registered office at Jeevandeep Building, Sansad Marg, New Delhi

110001.

The corporate office of NCGTC is functioning from SIDBI office located at MSME Development Centre,

C-11, G-Block, Bandra Kurla Complex, Bandra [East], Mumbai-400051. Certificate of Incorporation:

No.U65191DL2014GOI267069 dated March 28, 2014, issued by the registrar of companies [RoC], New

Delhi.

1. About NCGTC


http://ncgtc.in/


Page 6 of 68

Pradhan Mantri Mudra Yojana (PMMY) under the Micro Units Development and Refinance Agency (MUDRA) Bank is a new institution being set up by Government of India for development and refinancing activities relating to micro units. It was announced by the Finance Minister while presenting the Union Budget for FY 2016. The purpose of MUDRA is to provide funding to the non-corporate small business sector. The schematic interventions of MUDRA Ltd. have been named 'Shishu', 'Kishor' and 'Tarun' to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth.

Under the scheme, Pradhan Mantri Mudra Yojana three categories of interventions has been named

which includes:

Shishu Covering loans upto ₹50,000/- (Interest rate as stipulated by Mudra; presently not to exceed 12% p.a.)

Kishor Covering loans above ₹50,000/- and upto ₹5 lakh Tarun Covering loans above ₹5 lakh and upto ₹10 lakh

Further, Overdraft facility of ₹5,000/- sanctioned under PMJDY accounts shall also be eligible to be

covered under credit guarantee fund.

2. About Pradhan Mantri Mudra Yogana (PMMY)



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Credit Guarantee Fund for Micro Units (CGFMU) is the Trust Fund set up by Government of India, managed by NCGTC as a trustee, with the purpose of guaranteeing payment against default in Micro Loans extended to eligible borrowers by Banks/ NBFCs/ MFIs/ Other Financial Intermediaries.

The CGFMU Trust has come into being on March 30, 2016, where in Govt. of India, through Ministry of Finance is the settlor of the Trust and NCGTC is the Trustee. The Scheme of Credit Guarantee Fund for Micro Units (CGFMU) has come into force from the date notified by the Government of India in The Gazette of India (April 18, 2016) for all micro loans sanctioned since April 08, 2015 and the scheme has been operationalized since January, 2017

3. About Credit Guarantee Fund for Micro Units (CGFMU)



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1. Portfolio based Guarantee It means cumulative built up of quarterly outstanding balance of eligible micro loans sanctioned

on or after the date of launching of PMMY; i.e. April 08, 2015, which have not been classified as a Non performing asset in the books of the lending institution. Portfolio, comprising the corresponding sanction amount, would get crystallized at the end of the financial year in which the portfolio is built up (base year). Accordingly, fresh portfolio would commence from the beginning of the subsequent financial year.

Portfolios available for the Member Lending Institution are: a. Retrospective Portfolio: Portfolio/s pertaining to the previous financial year/s. The

records will be accepted, billed and then instantly crystallized.

b. Current Portfolio: Portfolio which will accommodate the records pertaining to the current Financial Year. The frequency of uploads in this portfolio is quarterly.

2. Credit Guarantee Coverage It is based on the amount in default, in respect of credit facility/ies extended by the Lending

Institutions. a. First Loss to the extent of 5% of the crystallized portfolio of the MLI, will be borne by

the MLI and therefore, will be excluded for the claim.

b. Out of the balance portion, the ‘extent of guarantee’ will be to a maximum extent of 50% of ‘Amount in Default’ in the portfolio, subject to maximum cap of 15% of the crystallized portfolio.

3. Credit Guarantee Fee For availing the guarantee coverage, the Member Lending Institution shall pay guarantee fee as

under: a. During the base year (year of portfolio built-up) – Guarantee fee will be paid on the

sanctioned amount corresponding to the outstanding balance of the quarterly built up balance of the portfolio of micro loans for the full year or the broken period i.e. till March 31 of the subsequent year, as the case may be, and the Guarantee will be valid upto the end of that financial year. Guarantee fee would be charged on the sanctioned amount from the date of first disbursement till end of March 31.

b. During subsequent years - The guarantee fee will be paid on the sanctioned amount corresponding to the outstanding balance (including on accounts which have turned NPA) of the crystallized portfolio during the currency of the portfolio and Guarantee will be valid upto the end of that financial year. Guarantee fee with respect to NPA accounts in the portfolio would continue to be paid till lodgment of claim for such accounts, at a rate specified by the Fund on the amount or fee based on risk based pricing / such other amount on such reference dates or specified rate set by the Fund from time to time (risk based guarantee fee components are as given in the Gazette Notification based on the 5 models).

Note:

Guarantee fee would be charged at the Standard Basic Rate (SBR) of 1% of sanctioned amount for the initial years. Subsequently risk based guarantee fee structure would be applicable.

4. Highlights of Credit Guarantee Scheme



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For term loans a provision for cancellation of un availed sanction has been allowed once during the lifetime of the Portfolio. Thus for term loans, only downward reduction in the sanctioned amount is allowed and that too can be done only once by the MLI.

With regards to limits, the modified sanctioned limit (Post review enhancement or reduction) will be considered for calculation of annual guarantee fee on the basis of annual updation.

No guarantee fee would be charged on an account after the account is reported closed in the update file. Say for instance, if an account is reported closed in the first update, no fee shall be charged on the account for currency period 1.

Fee up to date of lodgment of claim shall be charged on any account for which claim is lodged. Applicability of risk based Guarantee Fee Structure over and above SBR

Type of MLI Credit Ratings NPA ratio Claim Pay-out Ratio

PSU Bank/RRBs NA Yes Yes

NBFCs/MFIs Yes Yes Yes

#Such NPA accounts identified for loss settlement. *Receipts include all the receipts in mode of guarantee fees & recoveries from the MLI.



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NCGTC with Mastek Ltd has developed a B2B Enterprise-wide IT platform for seamless guarantee transaction called SURGE. It is an online B2B portal through which the Credit guarantee operations of various Credit Guarantee Schemes are managed by NCGTC. SURGE covers the complete life cycle of the Credit Guarantee process, from submission of Credit Guarantee request to issuance & renewal of applications (data) for credit guarantee, claim processing & settlement. It also provides all the reports and data w.r.t the CG operations like invoices, receipts & CG reports, data in the excel sheet.

5. System for Undertaking, Re-assurance & Guarantee Endorsement (SURGE)



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1 MLI Registration process (An off-line activity) Letters are issued to MLIs to register with CGFMU through NCGTC where MLIs are required to

furnish the following documents: a. Undertaking b. Copy of Board Resolution c. Annual Reports of preceding three financial years (Appendix 1 for ready reference)

2 Enrollment of MLI on NCGTC B2B platform [SURGE] (An on-line activity) a. This is an activity whereby Single Point of Contact [SPOC or the main Administrator for

creating creator/approver roles at the Central office of MLI] details are received from the MLI. A standardized format SPOC form is shared with MLI for sending MLI and MLI Administrator related information/details)

b. On receipt of SPOC, the MLI is then made active/registered on SURGE and system generated mail is sent to the registered e-mail id of the MLI Administrator with password.

c. The MLI Administrator creates Creators/Approvers at the MLI’s end. d. Application formats/ Data file layouts and formats along with XML Tags and list of possible

values for master code data (state code, district code, etc.) are shared with MLI for extraction of data from their Core-Banking Solutions. [URL has been shared with MLIs]

e. One-pager document (with various eligibility checks for enabling input file up-loads) to facilitate the MLIs in data extraction is also shared.

3 Portfolio Creation and Data upload on SURGE Application (Input File) is uploaded by MLI creator and approved by MLI approver. This

approved file supported by an on-line Management Certificate is submitted on the SURGE platform and such uploads are quarterly uploads for the loans sanctioned during the preceding quarter. NCGTC approver approves the data and runs the billing cycle to generate Statement of Estimates (giving details of account wise CG fee).

4 Provision of Data updates (post crystallization of the Portfolio) This is an annual exercise, on the basis of which annual billings are done. Separate UPDATE file

formats have been shared by NCGTC in this regard.

6. Typical Chronology of events in CG process/Activities involved



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5 Interim Claim Payouts Interim claims payouts are to be made in the 3rd & 4th year of portfolio life.

6 End of the Portfolio life Life of the Portfolio will end after 4 years i.e. Base year (year of crystallization) + 3 years.

7 Final Claim Payouts Final claim settlement is done after the portfolio life ends; i.e. during the 5th year.

8 Post Claim receipts Post claim receipts at MLIs will need to be shared with NCGTC.



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Section B

Transactions in SURGE



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Single Point of Contact (SPOC): Once registered, the MLI is provided with SPOC Form (MLI Information Form) to be filled and sent back to NCGTC. It is interaction with a single office of the MLI, for creation of MLI admin ID The SPOC Form is furnished for ready reference at Appendix 2. Creation of MLI ID (Username& Password) on SURGE Platform: Once the MLI sends a filled-in SPOC (MLI information) form the following procedures are undertaken to issue login credentials to the MLI Admin. MLI Admin can then create Creator & Approver IDs (5 in all):

Note: - MLI user manual for creation of MLI Creators & Approvers is available at -

http://surge.ncgtc.in/mudradownloadtemplates.html - Work flow of ‘MUDRA credit guarantee Scheme’ (A presentation guide for MLI

Creator’s/Approver’s) which contains a detailed process to upload input files; payment of fees and issuance of guarantee on SURGE is available at - http://surge.ncgtc.in/mudradownloadtemplates.html

Application formats/ Data file layouts: NCGTC has shared the input file layout format for CGFMU & XML layout for requesting new Credit Guarantee along with code-master for list of possible code values at: http://surge.ncgtc.in/mudradownloadtemplates.html – which MLIs can refer to on this page:

Input File Layout for “Credit Guarantee Fund for Micro Units”

Provides list of 30 input field which is needed for submission of guarantee application.

Sample XML Layout for Requesting New Credit Guarantee’s

Provides the XML layout format in which the consolidation of all credit information in respect of loan accounts (to be covered under the scheme) needs to be done. This layout is for seeking credit guarantee coverage for new records.

7. Enrollment of MLI on NCGTC B2B platform - SURGE (An on-line activity)



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Download Code Master for List of Possible Code Values

Provides usage of codes where applicable in the layout. The intent of using codes is to bring in standardization across MLI credit information.

Note: The file needs to be send in XML (Extensible Markup Language) format only. This choice of format is to follow ‘e-governance’ standards and to ease data extraction from MLI IT system and data uploads on SURGE platform. Eligibility Check: NCGTC has provided the list of eligibility checks in a one pager format furnished for ready reference at Appendix 3. This is envisaged to guide the MLIs in extracting data from their respective core-banking-solutions for seeking guarantee cover for eligible cases.



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1. Under the quarterly portfolio guarantee model adopted under CGFMU, pool of sanctions (by the

MLI) would need to be uploaded (quarterly) and crystallized at the end of the FY. The “crystallized portfolio” would then have a specified life (in the present case, 4 years, including the base year or the year during which the portfolio will get built up and at the year-end is crystallized). Note: The number of accounts (and not the sanctioned amount pertaining to these accounts) uploaded for the four quarters of the base year gets crystallized at the time of crystallization of a Portfolio. No new account(s) is permitted under a Portfolio once the Portfolio is crystallized

2. For each MLI, NCGTC would designate a Portfolio slot for within the B2B platform to facilitate upload of data related to sanctioned cases during a FY. Each portfolio (FY year-wise for each MLI) will have a dedicated slot created on the platform. MLI would upload the extracted credit data to this designated slot (portfolio) only. All credit guarantee operations will occur on this designated slot (portfolio).

3. Typically, each Portfolio will have 7 billing cycles during its 4-year life cycle (4 bills for 4 quarterly updates during the base period and 3 annual bills for 3 currency periods after the crystallization of the Portfolio).

An Illustrative Snap-Shot of Portfolio Life Cycle:

Life Span of the Portfolio (FY 2017-2018)

Life Span of the Portfolio (FY 2018-2019)

Base Year (FY 2017 – 2018)

Currency Period I

(FY 2018 – 2019)

Currency Period II

(FY 2019 – 2020)

Currency Period III

(FY 2020 – 2021)

Base Year (FY 2018 – 2019)

Currency Period I

(FY 2019 – 2020)

Currency Period II

(FY 2020 – 2021)

Currency Period III

(FY 2021 – 2022)

8. Portfolio Creation and Data upload on SURGE

Settlement Year

(FY 2021 – 2022)

Final Settlement

Settlement Year

(FY 2022 – 2023)

Final Settlement



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Transition of the Portfolio through its life cycle:

Uploading of data (input files) in XML for seeking new credit guarantees in current & retrospective

portfolio:

For current portfolio NCGTC has decided to allow upload of credit information for seeking new credit guarantees in certain time ‘window’ as below:

Portfolio creation

Designated Portfolio

slots provided by NCGTC

for a particular MLI for a

FY

Transit of the

crystallized portfolio to

Currency Period I (Year

2)

Transit of the Portfolio

from Currency Period I to

Currency Period II (Year

3)

Transit of the

Portfolio from

Currency Period II

to Currency Period

III (Year 4)

Portfolio built up

during base year

(Year 1)

Quarterly upload of

all the loans

sanctioned in the

previous quarter

Portfolio Crystallization

Portfolio with the records

sanctioned during a

particular FY is

crystallized at the end of

base year

Interim Claim I

Settlement at

the beginning

of the Currency

period II

Interim Claim II

Settlement at the

beginning of the

Currency period III

Transit of

the Portfolio

from

Currency

Period III to

Settlement

year

Final Claim

Settlement during

Settlement year



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For retrospective portfolio time window for uploading the portfolio details shall be advised by NCGTC from time to time. Types of Portfolio to be uploaded on SURGE:

Designated slot for each portfolio is created by NCGTC on SURGE platform for the MLIs to upload portfolio data. Once the portfolio is made functional from NCGTC’s end – the ‘Creators ’ of the MLI would be able to access it in their respective logins for upload of portfolio data.

NCGTC will make dedicated portfolio slots available on the SURGE platform – One for the ongoing financial year termed as CURRENT PORTFOLIO and other for earlier financial years termed as RETROSPECTIVE PORTFLIO (s).



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Identification of Current and Retrospective Portfolios:

Naming convention for portfolio

Example: Current Portfolio of ABCD Bank is ‘MUDABCD20172018C’ and Retrospective Portfolio will be ‘MUDABCD20162017R’. MLI can identify between Current and Retrospective by the suffix which will be either ‘C’ or ‘R’ as indicated in the example.

Guidance for portfolio Identification:

a. For every enrolled MLI there will be only one portfolio which is current portfolio. b. Every Portfolio is assigned one CGPAN. CGPAN is the Credit Guarantee Permanent Account

Number which indicates credit guarantee identifier. Since this scheme is a portfolio genre, all valid credit information allocated to portfolio will have this CGPAN association.

c. CGPAN format is as below:

Identifier

•A fixed identifier -'MUD'

MLI Code

•Unique Code for each MLI - A 4 character unique string

Financial Year Period for which Portfolio is Created

•Comprises of:

•Financial Year start period

•Financial Year end period

Suffix for Current or Retrospective Portfolio

•For Current Portfolio Suffix 'C'

•For Retrospective Portfolio Suffix 'R'

Identifier

•A fixed identifier - 'CG'

Scheme Code

•Mudra Scheme code is - 'MUD'

Docket Code

•The Docket Code for General Schemes is 'GEN'

Date Stamp

•Date Stamp as DDMMYYYY -On which CGPAN is issued

Unique Number

•A 8 digit running number



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Portfolio transition- Status Codes:

Each portfolio in SURGE will have a status code – to indicate at what stage the portfolio has transited. Following are the status codes and their occurrences:

S. No. Portfolio Status Description

1 Base Period – Q1 Current Portfolio – When the portfolio is created in current FY Quarter 2 (i.e. in month Jul)

2 Base Period – Q2 Current Portfolio –

When the portfolio is created in current FY Quarter 3 (i.e. in month Oct) OR

When transited from Base Period Q1 state

3 Base Period – Q3 Current Portfolio –

When the portfolio is created in current FY Quarter 4 (i.e. in month Jan) OR

When transited from Base Period Q2 state

4 Base Period – Q4 Current Portfolio – When the portfolio is created in Quarter 1 of next

FY (i.e. in month Apr) OR When transited from Base Period Q3 state

For Retrospective portfolio Base Period Q4 state will be default status value when created

5 Crystallized Current Portfolio & Retrospective Portfolio – When transited from Base Period Q4 state

6 Currency Period I Current Portfolio – After Base Period billing cycle has been executed AND Payments have been received AND Portfolio has been ‘Crystallized’. At start of next FY.

Retrospective portfolio – After Base Period billing cycle has been executed AND Payments have been received AND Portfolio has been ‘Crystallized’.

7 Currency Period II Current Portfolio – After Annual billing cycle has been executed for ‘Currency Period I’AND Payments are received. At start of next FY.

Retrospective portfolio - After Annual billing cycle has been executed for ‘Currency Period I’AND Payments are received.

8 Currency Period III Current Portfolio – After Annual billing cycle has been executed for ‘Currency Period II’AND Payments are received. Also after settlement of eligible claims, if any, lodged in Interim Claim File I. At start of next FY.

Retrospective portfolio - After Annual billing cycle has been executed for ‘Currency Period II’AND Payments are received. At start of next FY. Also after settlement of eligible claims, if any, lodged in Interim Claim File I.

9 Settlement Year Current Portfolio – After Annual billing cycle has been executed for ‘Currency Period III’AND Payments are received. Also after settlement of eligible claims, if any, lodged in Interim Claim File II.



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Retrospective portfolio - After Annual billing cycle has been executed for ‘Currency Period III’AND Payments are received. Also after settlement of eligible claims, if any, lodged in Interim Claim File II.



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Status of the Portfolio after uploading an input file:

MLI Creator will come to know of the portfolio status when they select a particular portfolio in their respective logins:

Note: There will be no specific communication from NCGTC to the members on this aspect.

Management Certificate:

As mentioned in the Gazette notified scheme, the MLI is required to furnish Management Certificate, prescribed by the Fund on the SURGE platform electronically at the time of any file that is uploaded is being approved by MLI approver (File for issue of new Credit Guarantee, File for updates, File for lodging Claims etc). These Management certificates have been incorporated in SURGE and the MLI approver will have to certify the same while approving the uploaded input file(s). Formats of various Management Certificates are furnished for ready reference at Appendix 4.

Change in the transition of the portfolio status. Automatic or Manual?

The change in portfolio status is not automatic (or system driven) but done by NCGTC and will be completed on completion of the following activities:

1. The MLI needs to provide its credit information and upload the same in the designated portfolio and

2. After the billing cycle is run by NCGTC and its corresponding CG fee payment is done by the MLI.

3. On receipt of the CG fees and reconciliation at NCGTC, NCGTC transits (or changes) the portfolio status.

Portfolio Name/ Status



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Transitions for retrospective portfolios till Currency Period I:

For retrospective portfolio the following are the transition scenarios till Currency Period I: Initial Stage:

Please note that for a Retrospective Portfolio the file upload for issuance of new Credit Guarantees

is undertaken with Portfolio status as Base Period Q4.

Transitions for current portfolios till Currency Period I:

For current portfolio the following are the transition scenarios till Currency Period I: When Portfolio is in Base Period Q1 State:

When Portfolio is in Base Period Q2 State:



Base Period Q4

Execute Base Period Q4

Billing Cycle

(By NCGTC)

Payment for Base Period Q4

Billing Cycle

(BY MLI)

Crystallized portfolio

(By NCGTC)

Transit – To –Currency Period I

(By NCGTC)

Base Period Q1

Execute Base Period Q1

Billing Cycle

(By NCGTC)

Payment for Base Period Q1

Billing Cycle

(By MLI)

Transit – To –Base Period Q2

(By NCGTC)

Base Period Q2

Execute Base Period Q2 Billing Cycle

(By NCGTC)

Payment for Base Period Q2 Billing

Cycle

(By MLI)

Transit – To – Base Period Q3

(By NCGTC)

Base Period Q3


(By NCGTC)


Cycle

(By MLI)

Transit – To – Base Period Q4

(By NCGTC)

Base Period Q4


(By NCGTC)


Cycle

(By MLI)

Transit – To –Crystallized - To Currency Period I

(By NCGTC)



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The transitions in currency periods for Current and Retrospective portfolios:

For both current and retrospective portfolio, the following are the transition scenarios in currency

periods:

When Portfolio is in Currency Period I:

When Portfolio is in Currency Period II:

When Portfolio is in Currency Period III:

Currency Period I

Execute Currency Period I Billing Cycle

(By NCGTC)

Payment for Currency Period I

Billing Cycle

(By MLI)

Transit – To –Currency Period II

(By NCGTC)

Currency Period II

MLI uploads update file

and also Iterim claim

1 file

Execute Currency Period II

Billing Cycle

(By NCGTC)

Payment for Currency Period II

Billing Cycle

(By MLI)

Interim claim

settlement 1

Transit – To – Currency Period III

(By NCGTC)

Currency Period III

MLI uploads update file

and also Iterim claim

2 file

Execute Currency Period III

Billing Cycle

(By NCGTC)

Payment for Currency Period III

Billing Cycle

(By MLI)

Interim claim

settlement 2

Transit – To – Final

Settlement year

(By NCGTC)



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10. Credit Guarantee Fee

CG Fees:

CG Fee is calculated only for the accounts which have been disbursed and the fee is calculated

from the date of first disbursement for each account.

Once an account is reported as ‘closed’ in update file, no further CG fee is calculated for that

account.

In case, claim is lodged for an account, CG fee is calculated only upto the date of lodgment of

claim for that account.

Statement of Estimates (Before MLI Approver submits Input/Update files):

A provision for Tentative Billing has been provided on SURGE to facilitate MLIs to get an

estimate of account-wise CG Fee while uploading quarterly input files as well as annual update

files. MLIs could make use of this provision for internal permissions/ approvals before

submitting the file to NCGTC.

A menu link has been made available to MLI’s – which they need to click after their input file

validation is complete.



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MLI’s will need to select their respective input file and download the spread sheet which provides

information on the bill generated at each account level.



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Search CG

MLI User will be able to search a particular record/s in SURGE system (only those records on which

Credit Guarantee has been Successfully issued) based on following search parameters:

- Loan Account No.

- CGPAN

Either of parameter 1 or 2 is mandatory

The result of the above search criteria (if any) will be displayed in the grid on the screen of the user –

on which further filtering can be done.

11. Search, View & Update- Credit Guarantee(CG)



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View CG:

MLI User can further select a single record from the Search results for detailed view of the CG using

‘View Details’. Following details are provided to the user:

The main ‘Master’ record details – this section provides information provided by MLI at the time of

New CG Request.

The ‘Transaction’ record details – subsequently if the user or system does any transaction on the

issued CG , the details of the same would be available here.

SURGE allows MLI users to save and print selected CG details. Save allows user to save selected CG in

Acrobat PDF format. Print option is available after pressing the Save button.



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Update CG:

The following fields will be available to the MLI user for updating any particular CG:

- PAN No.

- IFSC Code

- Udyog Adhaar No.

- Driving License

- Voters ID

Once the details have been updated by the MLI user the same will get updated in a Real-time, where

the user will first have to search and select a particular CG and then proceed to update these details.

Only one CG can be updated at a given time. The updating of a transaction will have the Creator-

Approver workflow.



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File updation will be in the month of May each year till portfolio closure.

Sample XML file layout for Updating Credit Guarantee for CGFMU is available on

http://surge.ncgtc.in/mudradownloadtemplates.html to be read along with Code master for list of

code values.

`

12. Provision of Data updates (post crystallization of the Portfolio)



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Section C

Claims & Recoveries



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SURGE will accept input file for Claims from MLI(s) in XML file format only.

Sample XML file layout for claims requisition under CGFMU is available on

http://surge.ncgtc.in/mudradownloadtemplates.html to be read along with Code master for list of

code values.

Management Certificate required to be submitted at the time of Claim lodgement would be system

generated and would have to be accepted and forwarded by the MLI approver at the time of claim

lodgement. The Management Certificate would give the summary of the Claim (Refer Appendix 4).

13. Provision for Claims Request



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Interim claim pay-outs will be carried out in Currency year 2 & Currency year 3 (3rd & 4th year of

Portfolio life).

In other words, the MLI may invoke the guarantee in respect of the ‘Amount in Default’ out of the

crystallized portfolio of micro loans, subject to the condition of first loss guarantee, after 1 year from

the date of crystallization of the portfolio and thereafter, at the end of every financial year.

Claims will be paid out on interim basis on interim loss assessment subject to such loss being more

than 5% of the crystallized Portfolio. The pay-outs are interim in nature as the overall loss scenario in

the Portfolio will be known only after the end of the 4th year.

14. Interim Claim pay-out



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The portfolio has a life of 4 years (Base Year + 3 years).

The portfolio will be reviewed every year after the base year for any claims payable by the fund.

The 5th year is the settlement year & settlement is based on the overall loss in the portfolio.

The loss will get crystallized in the 5th year and corresponding accounts will get identified. Any

recovery in the Portfolio for identified accounts post settlement, will need to be reimbursed to the

guarantor only in excess of the first loss amount and in the ratio of 50:50 subject to the claim settled.

15. End of the life of the Portfolio



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The final claim pay-out would be made during the 5th year of the Portfolio life cycle (i.e. after the end

of Portfolio life).

The overall loss in the Portfolio will be based on the ‘Amount in Default’ identified in respect of the

loss accounts (defined as NPA for a continuous period of 6 months) and the guarantee cover would

be 50% of second loss (after considering 5% first loss) after deducting the cumulative claim pay out in

Interim claim I & II.

First 5% of the crystallized Portfolio would be the threshold amount for considering first loss cover to

be borne by the MLI.

The total claim pay-out ratio would be capped at 15% of the crystallised portfolio limit with a view

to ensure equitable distribution of benefits and sound credit management by MLIs.

For arriving at the final settlement, the interim settlements (if any) made in the Portfolio would be

assessed and after assessing the total loss in the Portfolio (net of first loss of 5% and subject to claim

pay-out cap of 15%), the net payment would be settled for the Portfolio.

To understand the claim calculations, scenarios mentioned hereunder may be referred to.

Scenario – Claim in Interim Period I:

Crystallized portfolio Sanctioned Amount (Summation of sanctioned amount/modified sanctioned

amount for all accounts in the Portfolio which are marked disbursed on SURGE): 1,00,000/- ..(A)

The details provided by MLI in claim requisition file:

Customer Id

Loan Account

Principal O/s as on the date of NPA

Interest O/s as on the date of NPA

Recoveries (if any) from the date of NPA till the date of lodgment of present claim

Total Loss

A b C d=a+b-c

ABC1 ACCT1 100.00 20.00 12.00 108.00

ABC2 ACCT2 200.00 20.00 - 220.00

ABC3 ACCT3 300.00 20.00 - 320.00

ABC4 ACCT4 10,000.00 2,000.00 - 12,000.00

ABC5 ACCT5 20,000.00 15.00 - 20,015.00

ABC6 ACCT6 1,000.00 20.00 - 1,020.00

ABC7 ACCT7 2,000.00 15.00 11.00 2,004.00

ABC8 ACCT8 500.00 20.00 - 520.00

ABC9 ACCT9 100.00 20.00 - 120.00

ABC10 ACCT10 100.00 20.00 - 120.00

ABC11 ACCT11 100.00 20.00 - 120.00

ABC12 ACCT12 100.00 20.00 - 120.00

34,500.00 2,210.00 23.00 36,687.00

16. Final Claim Pay-out



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Thus, Total Loss: 36,687.00/- ……(A1)

Amount of first loss (which is 5% of A): 5000.00 ……(B)

Maximum Capped interim claim @15% of A: 15,000.00 ……(B1)

Second Loss (A1-B): 31,687.00 ……(C)

Amount of Eligible interim claim @50% of C: 15,843.50 ……(D)

If D exceeds B1, then, the interim claim is B1 else it is D. Thus, in this case, the interim claim is

15,000.00/-

Note: if the interim claim works out as less than zero, then, it is considered and settled as zero.

Scenario – Claim in Interim Period II:


amount for all accounts in the Portfolio which are marked disbursed on SURGE): 1,50,000/- …(A)


Customer Id

Loan Account



Recoveries (if any) from the date of NPA till the date of lodgement of present claim

Total Loss

a b c d=a+b-c

NOTE - that this a/c list is same as provided

during Interim Claim

Period I

ABC1 ACCT1 100.00 20.00 200.00 (80.00)

ABC2 ACCT2 200.00 20.00 - 220.00

ABC3 ACCT3 300.00 20.00 - 320.00

ABC4 ACCT4 10,000.00 2,000.00 - 12,000.00

ABC5 ACCT5 20,000.00 15.00 120.00 19,895.00

ABC6 ACCT6 1,000.00 20.00 - 1,020.00

ABC7 ACCT7 2,000.00 15.00 10.00 2,005.00

ABC8 ACCT8 500.00 20.00 - 520.00

ABC9 ACCT9 100.00 20.00 - 120.00

ABC10 ACCT10 100.00 20.00 - 120.00

ABC11 ACCT11 100.00 20.00 - 120.00

ABC12 ACCT12 100.00 20.00 - 120.00

These a/c are identified newly during Interim Claim Period II

ABC13 ACCT13 500.00 20.00 - 520.00

ABC14 ACCT14 100.00 20.00 - 120.00

ABC15 ACCT15 100.00 20.00 10.00 110.00

ABC16 ACCT16 500.00 20.00 12.00 508.00

ABC17 ACCT17 100.00 20.00 - 120.00

ABC18 ACCT18 100.00 20.00 100.00 20.00

35,900.00 2,330.00 452.00 37,778.00



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Thus, Total Loss: 37,778.00/- ……(A1)

Amount of first loss (which is 5% of A): 7,500.00 ……(B)


Second Loss (A1-B): 30,278.00 ……(C)

Amount of Eligible interim claim @50% of C: 15,139.00 ……(D)


15,139.00/- ……(E)

However, there has been a Cumulative Payout till date (CP1): 15,000.00/- ……(F)

Thus, the final interim claim payout works out as D – E = 139.00/-

Note: if the interim claim works out as less than zero, then, it is considered and settled as zero.

Scenario – Final Claim Settlement:


amount for all accounts in the Portfolio which are marked disbursed on SURGE): 1,50,000/-…(A)


Customer Id

Loan Account



Recoveries (if any) from the date of NPA till the date of lodgement of present claim

Total Loss

a b c d=a+b-c

NOTE - that this a/c list is same as provided

during 1st claim

ABC1 ACCT1 100.00 20.00 200.00 (80.00)

ABC2 ACCT2 200.00 20.00 - 220.00

ABC3 ACCT3 300.00 20.00 - 320.00

ABC4 ACCT4 10,000.00 2,000.00 - 12,000.00

ABC5 ACCT5 20,000.00 15.00 120.00 19,895.00

ABC6 ACCT6 1,000.00 20.00 - 1,020.00

ABC7 ACCT7 2,000.00 15.00 10.00 2,005.00

ABC8 ACCT8 500.00 20.00 - 520.00

ABC9 ACCT9 100.00 20.00 - 120.00

ABC10 ACCT10 100.00 20.00 - 120.00

ABC11 ACCT11 100.00 20.00 - 120.00

ABC12 ACCT12 100.00 20.00 - 120.00

These a/c are

identified newly

ABC13 ACCT13 500.00 20.00 - 520.00

ABC14 ACCT14 100.00 20.00 - 120.00

ABC15 ACCT15 100.00 20.00 10.00 110.00

ABC16 ACCT16 500.00 20.00 12.00 508.00

ABC17 ACCT17 100.00 20.00 - 120.00

ABC18 ACCT18 100.00 20.00 100.00 20.00



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These a/c are

identified newly

ABC19 ACCT19 300.00 20.00 - 320.00

ABC20 ACCT20 10,000.00 2,000.00 - 12,000.00

ABC21 ACCT21 20,000.00 15.00 10.00 20,005.00

ABC22 ACCT22 300.00 20.00 12.00 308.00

ABC23 ACCT23 10,000.00 15.00 10.00 10,005.00

ABC24 ACCT24 20,000.00 15.00 12.00 20,003.00

96,500.00 4,415.00 496.00 100,419.00

Note: for Loan Account ACCT7, the recovery provided in this claim file is not same as what provided

in the previous file and is reduced as compared to previous recovery. But this is an acceptable scenario.

Thus, Total Loss: 100,419.00/- ……(A1)

Amount of first loss (which is 5% of A): 7,500.00 ……(B)


Second Loss (A1-B): 92,919.00 /- ……(C)

Amount of Eligible interim claim @50% of C: 46,459.50/- ……(D)


22500.00/- ……(E)

However, there has been a Cumulative Payout till date (CP1): 15139.00/- ……(F)

Thus, the final interim claim payout works out as D – E = 7361.00/-



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Every amount recovered and due to be paid to the Fund shall be paid without delay, and if any amount

due to the Fund remains unpaid beyond a period of 30 days from the date on which it was first

recovered, interest shall be payable to the Fund by the lending institution at the rate stipulated by the

Management Committee for the period for which payment remains outstanding after the expiry of

the said period of 30 days.

Where subsequent to the Fund having released a sum to the lending institution towards the amount

in default in accordance with the provisions contained in 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 the Fund, after adjusting towards the legal costs incurred by it for recovery of

the amount. Refer illustrations 3.

17. Post Claim Receipt



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Illustration 3

Treatment of Claim Pay-out

- Let the portfolio be a case of 100 cases with Re.1/- sanction.

- Therefore, The overall crystallized portfolio of Rs.100/-

- At the end of the portfolio life, 10 loss cases identified out of the 100 cases crystallized in the

portfolio. The 10 cases identified in the portfolio with respective loses are as under:

1 Identified Loss Cases Loss Amount in each Case (Rs.)

Case 1 0.70

Case 2 0.30

Case 3 0.75

Case 4 0.25

Case 5 1.25

Case 6 0.75

Case 7 0.90

Case 8 0.60

Case 9 0.75

Case 10 0.75

2 Total loss crystallized in the portfolio 7.00

3 First loss to be borne by the MLI 5.00

4 Share after netting off First Loss [S.N.2-S.N3] 2.00

5 Pay out by Fund/Guarantor [50% of S.L. 4] 1.00

Treatment of Post Claim Receipts with reference to Illustration 3:

As per the notified Scheme (Chapter VII pt. 1 of Gazette Notification dated 18th April, 2016), if the

lending institution recovers any amount from such loss same shall be returned to the Fund after

adjusting all the legal expenses (including first loss).

In the above illustration, the MLI would need to maintain records/accounts with regard to all the

identified loss cases (10 cases) for the purpose of treatment of adjustment of post claim receipts

with regard to the above portfolio.

18. Detailed Illustration



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If MLI recovers Rs.5/- then no amount will be credited back to the Fund (since the first loss covers

Rs.5/-).

Presuming, that the MLI has recovered Rs.6/- and spent Re.1/- on legal expenses, then no amount

will be credited back to the Fund

Similarly, if MLI recovers Rs.6/-, without any other expenses, then Re.1/- will be credited back to

the fund. The Fund in turn will adjust Re.0.50/- and refund Rs.0.50/- back to the MLI. (anything

over and above Rs.5/- i.e. Re.1/-, divided into 50:50 ratio by the Fund and then refunded)



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MLI provides payment details

(recovery amount, date,UTR)

NCGTC Accounts officer verifies the payment received

from their Bank statement

Payment detail is verified

Recovered amount reflects in the

CGFMU Recovery history on SURGE.

19. Treatment of recovery proceeds on SURGE



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Section D Comprehensive Overview

- Portfolio Lifecycle



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The Portfolio life-cycle covers multiple activities required to be carried out at the MLIs end at different

points in the life cycle. These typically include upload of three different types of input file formats; viz,

1. input file for new credit guarantee during the Base Year,

2. Update files for submitting annual updates of the accounts covered in the portfolio and

3. Claim files for lodgment of claims in Year 3, Year 4 and Settlement Year of the Portfolio.

This apart, for a typical portfolio, 7 bills (invoice for payment of guarantee fee) would be generated at

NCGTC based on the file uploads.

With regard to claim settlements, 3 pay-out windows (Interim Settlement 1 during year 3, interim

settlement 2 during year 4 & final settlement in the year 5) have been provided as per the Scheme.

A separate Module has been developed on SURGE for capturing the details of Post claim recoveries

made by MLI under a Portfolio after Final Settlement.

With a view to depict the above mentioned activities on a time line, a snap-shot is furnished below:

PARTICULARSSETTLEME

NT YEAR/

Y5

Post Claim

Settlement

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

New CG Input file BF1 BF2 BF3 BF4

Update File UF1 UF2 UF3 UF4

CG BillsBI B2 B3 B4 B5 B6 B7

Interim Claim File I C F 1 I C F 2

Final Claim File F C F

Claim Settlement I C S 1 I C S 2 F C S

Post Claim Recoveries

(PCR) PCR

CP-CURRENCY PERIOD

Y- YEAR

BF- BASE YEAR FILE

UF- UPDATE FILE

B- BILLING

I C F- INTERIM CLAIM FILE

F C F- FINAL CLAIM FILE

I C S- INTERIM CLAIM

SETTLEMENT

F C S- FINAL CLAIM

SETTLEMENT

B7 shall be generated based on UF3 and ICF2

Note:

PORTFOLIO LIFE- ACTIVE

Base Year/Y1 CP 1/ Y2 CP 2/ Y3 CP 3/ Y4

FINAL SETTLEMENT/POST

CLAIM

B1,B2,B3,B4 & B5 SHALL BE BASED ON BF1,BF2,BF3,BF4 & UF1 RESPECTIVELY

B6 shall be generated based on UF2 and ICF1

20. Snap-shot of the Portfolio life-cycle activities



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21. Stage wise Check List for MLIs

Checklist for the Input File (Application Stage)

Only Collateral free / third party guarantee free Micro Loan [loan/limit not exceeding Rs.10 lakh] extended to micro unit / enterprise as defined in the MSMED Act, 2006 (and whose credit requirement does not exceed Rs.10 lakh) needs to be submitted for coverage under the scheme.

All eligible sanctions during each quarter of the base year (irrespective of the disbursement status of

the account) has to be submitted in the immediate next quarter for inclusion in the Portfolio.

MLI could make use of the Tentative Billing button provided on SURGE to get an estimate of the account

wise CG Fee to be paid.

Data in respect of all mandatory fields need to be submitted. Some basic validations have been put on

SURGE to prevent flow of inconsistent data in the system. Such validations include checks like Date of

sanction can’t be after Date of First Disbursement, Amount of First Disbursement can’t exceed

Sanctioned Amount, Amount of Sanction can’t be zero/ negative, Amount of Disbursement can’t be

negative etc.

Checklist for the Update File (Year 2 onwards)

While submitting the update file, MLI shall ensure the following:

Update file should be submitted within the time stipulated by NCGTC. In case the update file is not

received within the stipulated time, then NCGTC would run the billing (CG Fee calculation) on the latest

data available on SURGE. Accounts for which update is not submitted / invalid update is submitted,

fee is calculated based on information available on SURGE.

Updated information about Modified Sanctioned Amount, first date of disbursement and Closure

status of the accounts in the Portfolio is accurately submitted. This information is used for CG Fee

calculation.

MLI has to ensure that for each customer covered under CGFMU, the total credit facilities (excluding

the Overdraft loan amount of Rs.5,000/- sanctioned under PMJDY accounts) submitted for guarantee

coverage does not exceed Rs.10 lakh. This rule shall apply within as well as across CGFMU Portfolios

of the MLI. Any update submitted by MLI which violates the said rule shall be rejected by the system

(Error Message: Breach of Sanction Limit for Micro Loans under CGFMU. CG for this loan account

will be discontinued) and guarantee(s) in respect of all such loan accounts (for which the update has

been submitted) shall be discontinued.

Checklist for the Claim File

All cases eligible for claim lodgement ( accounts satisfying the claim lodgement pre-condition of 6

months seasoning as NPA) should be submitted in the Claim File even though the eligible claim

settlement amount under the Portfolio is zero ( i.e when no claim pay-out is due under the Portfolio as

the reported loss is less than first loss of 5% of the crystallized portfolio / cumulative claim already

settled is more than the eligible claim amount ).This would ensure that CG fee on accounts submitted

for claim is charged up to date of lodgement of claim.

Any account submitted once in a claim file, needs to be resubmitted in all the consequent claim files.

For such account, no change in the Principal and Interest amount as on date of NPA is accepted in the

consequent claim files. Only recoveries under such accounts could be modified from the last amounts

reported.

Principal outstanding for an NPA account should be less than or equal to the sanctioned amount (which

has been considered for billing).

Statutory Auditor’s certificate would need to be submitted by MLI before submitting the final claim

file.



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Section E

APPENDIX



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{Draft of undertaking to be executed by lending institution}

To The Chief Executive Officer, National Credit Guarantee Trustee Company, SME Development Centre, 2nd floor, Plot No.C-11, ‘G’ Block Bandra Kurla Complex, Bandra (East) Mumbai-400051 Dear Sir,

In consideration of the National Credit Guarantee Trustee Company

(hereinafter referred to as “the Company” which expression shall, unless repugnant to

the context, also include its successors and assigns), agreeing to guarantee under the

Credit Guarantee Fund for Micro Units (a copy whereof is hereto annexed and which

is hereinafter referred to as “the Scheme”), certain credit facilities granted by us to

eligible borrowers, we ______________________________________ (Name of

lending institution), do hereby agree with the Company as follows :

1. That the provisions of this Undertaking shall be in addition to, and not in derogation

of, the provisions of the Scheme and the guidelines and instructions issued by the

Company from time to time.

2. That the provisions of the Scheme and such modifications as may be made thereto

from time to time shall be deemed to be incorporated in this Undertaking and shall

be binding on us, in so far they relate to the credit facilities granted by us to

borrowers which have been or are eligible for being guaranteed thereunder.

3. That the provisions of the Scheme and this Undertaking shall be applicable to or in

relation to all credit facilities eligible for guarantee under the Scheme.

22. Appendix 1 - Undertaking format – MLI Registration



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4. That we shall claim the benefit of the guarantee under the Scheme only in respect

of the credit facilities specified in the Scheme and to the extent provided therein and

that we shall for this purpose obtain and preserve affidavits or other documents from

the borrowers concerned that the borrowers in respect of whom the benefit of the

guarantee has been or is to be provided by the Company are eligible for the

guarantee under the Scheme.

5. That we agree that a borrower who ceases to be so eligible will, in accordance with

and subject to the provisions of the Scheme, be excluded from the benefit of any

guarantee and that for this purpose, we shall obtain from the borrower concerned

every quarter or at such other intervals as may be required by the Company, such

information declarations as may be deemed necessary.

6. That the books of accounts, ledgers and other documents relating to eligible credit

facilities, covered by the Scheme shall, as far as may be practicable, be segregated

and maintained in a proper manner so as to facilitate such scrutiny or inspection as

may be undertaken by the Government of India (GOI) or by the Company or by any

other person nominated by the Company in this behalf.

7. by the Company in this behalf, as the case may be, all our books and records and

provide such other facilities as may be required for such scrutiny and inspection.

8. That we shall furnish to the Company a statement in a form and manner required

by the Company, showing the outstanding balances with break-up of principal and

interest / other expenses details in respect of the eligible credit facilities covered

under the Scheme, as and when required by the Company.

9. That we shall furnish to the Company thereafter such statements or information as

the Company may require about the eligible credit facilities in such form and

manner, and at such intervals, as may be required by the Company.

10. That in order to enable the Company to ascertain whether a claim made on it is on

account of any eligible credit facility which has been so covered, we shall preserve



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in good order the detailed statement or statements referred to in clauses 7, 8 and 9

hereof as also the relevant documents relating to the credit facility.

11. That we shall, in respect of every eligible credit facility, exercise due diligence in

recovering the dues, and safeguarding the interest of the Company. We shall, in

particular, refrain from any act of omission or commission either prior to or

subsequent to invocation of guarantee, which may adversely affect the interest of

the Company / Trust as the guarantor.

12. That for invoking the guarantee under the Scheme, we undertake to submit to the

Company an application in such form as may be specified by the said Company

and furnish such other information as may be required of us by the Company.

13. That we shall secure for the Company or its appointed agency the right to list the

defaulted borrowers names and particulars on the web site by the Company.

14. That notwithstanding anything to the contrary contained in the Scheme, if any loss

occurs in respect of an account covered by the Scheme owing to actions / decisions

taken contrary to or in contravention of the guidelines issued by the Company, we

shall not make and shall not also be entitled to any claim on the Company in respect

of the said account.

15. That all applications, documents, receipts, statements and other papers shall be

signed on behalf of our institution by the Chief Executive Officer or by other persons

in our employment who shall be deemed to be authorised by us to sign all such

applications, documents, receipts, statements and other papers and that any

irregularity in the signature, or want of authority of the persons so signing shall not

in any way affect or prejudice the rights of the Company or affect our liability in

respect thereof.

16.That all data, including applications, periodical returns, funds transfer, updated or

transferred to the Company in the electronic form, shall be deemed to be signed on

behalf of our institution by the Chief Executive Officer or by other persons in our

employment who shall be deemed to be authorised by us to sign all such



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applications, documents, receipts, statements and other papers and that any

irregularity in the use of member-id, or want of authority of the persons so signing

shall not in any way affect or prejudice the rights of the Company or affect our

liability in respect thereof.

17. That we shall introduce and follow such accounting arrangements as may be

necessary or as may be required by the Company or take such other steps as may

be necessary or expedient for protecting its interests in respect of the outstanding

balances on account of credit facilities in regard to which the Company’s guarantee

is invoked by us.

18. That this Undertaking shall take effect from the first day of ____________.

19. That the stamp duty payable on this Undertaking shall be borne by us.

Yours faithfully,

For and on behalf of ____________________

Signature _____________________________

Name _______________________________

Designation ___________________________

Place :_______________________

Date : _______________________

Note :

(i) This Undertaking is to be executed by the lending institution for getting itself

registered as Member Lending Institution (MLI) to avail of the guarantee facility

extended by the Company.

(ii) This Undertaking is to be executed by an official authorised by appropriate authority

of the lending institution.



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(iii) This Undertaking is to be stamped as an agreement. The liability to stamp duty will

depend upon the place where it is executed and/ or acted upon.

(iv) Kindly enclose resolution from your Board of Directors, approving enrolment as

member of National Credit Guarantee Trustee Company.



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23. Appendix 2 - Single Point of Contact (SPOC) form



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24. Appendix 3 - Eligibility Checks for Guiding MLI (One Pager)



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25. Appendix 4 - Management Certificate

Management Certificate for New CG

Management Certificate

We (the MLI) certify that:

1. The information provided in the uploaded file is for all accounts in the crystallized Portfolio and

is true and correct information to the best of our knowledge.

2. We are aware that:

a. The Trust will use this information for calculating the Annual Guarantee Fee for the

Portfolio.

b. The Guarantee Fee shall be charged on updated sanctioned amount in respect of all live

accounts (which have not been reported as ‘closed’ to the Trust) including NPA accounts

c. The Guarantee Fee for any account for which claim has been lodged shall be charged

upto the date of lodgment of claim.

d. Any request for refund of fee on the grounds of wrong submission of information by MLI

shall not be entertained by the Trust.


We (the MLI) certify that:

1. The information provided in the uploaded file (called as Portfolio) are in line with Credit Guarantee Fund for Micro Units (CGFMU) as notified in the Gazette Notification dated 18th April, 2016.

2. All accounts covered in the portfolio are standard accounts.[except accounts pertaining to FY 2015-2016 which are covered retrospectively]

3. All loans accounts covered in portfolio are without collateral security or third party guarantee.

4. Micro loans are not additionally covered by Govt. / General Insurer/ Any person or association of persons carrying on the business of insurance, guarantee or indemnity to the extent they are covered under the Scheme.

5. Micro Loans are not inconsistent with Law/ any directives or instructions issued by the Central Government or the RBI.

Management Certificate for Update of CG



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Management Certificate for Claim


It is certified that:

1. Each of the Micro Loan included in the Claim File has been classified as Non-Performing Asset (NPA)

as per RBI guidelines and the loan account has remained NPA for a continuous period of ‘more than

6 months’ from the date of account turning NPA.

2. All the recoveries pertaining to each account after the date of NPA and before the claim lodgment

have been duly incorporated in the Claim File.

3. We have uploaded the Bank Mandate Form giving details of our Bank Account for crediting

the proceeds of the claim settlement.

4. The information provided in the uploaded file (called Claim File) is in line with the Credit Guarantee

Fund for Micro Units (CGFMU) as notified in the Gazette Notification dated April 18, 2016.

5. Summary of the Claim being submitted under Portfolio No. MUDBank20152016R is as under :

PortFolio :

MLI Name :

Crystallized Sanctioned Amount (Rs.) :

No. of Accounts identified as Loss Assets :

First Loss (Rs.) :

Maximum Cap on Claim (Rs.) :

Total Principal Outstanding as on the date of NPA (Rs.) :

Total Interest Outstanding as on the date of NPA (Rs.) :

Total Recoveries from the Date of NPA (Rs.) :

Total Loss Reported (Rs.) :

Second Loss (Rs.) :

Cumulative Claim Settled (Rs.) :

Eligible Claim Lodged(Rs.) :



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26. Appendix 5 - Gazette Notification –Scheme dated April 18, 2016



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