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Guarantee fee

For credit facility upto Rs.5 lakh, an upfront Guarantee Fee (GF) of 1% of the amount sanctioned will have to be paid to the Trust by the MLI. For amounts sanctioned beyond Rs.5 lakh and upto Rs.100 lakh, the GF is 1.5%, while for credit facility upto Rs. 50 lakh for  units in the North Eastern Region including Sikkim , the GF is 0.75% . The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower.

Annual service fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 0.50% on the amount guaranteed for credit facilities upto Rs.5 lakh and 0.75% on the amount guaranteed for credit facilities beyond Rs.5 lakh and upto Rs.100 lakh. Such ASF is to be paid by the MLI on or before 31st May of that year. The Trust reserves the right to revise the guarantee fee / annual service fee from time to time.

Cost to the borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves. 

Interest rate payable by borrower

The MLI shall follow the guidelines issued by RBI. However, interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI, excluding the annual service fee.


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