What is the Guarantee Fee and Annual Service Fee under CGTMSE SCHEME?

Guarantee Fee and Annual Service Fee

               (i)            One-time guarantee fee at specified rate ((a)currently1.00% in the case of credit facility upto Rs.5 Lakh and1.5% 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 within30 days from the date of first disbursement of credit facility (not applicable for Working capital) or30 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 (currently0.50% in the case of credit facility upto Rs.5 Lakh and0.75% in the case of credit facility above 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 within60 days ie. on or before May31, of every year. In the event of non-payment of annual service fee by May31 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 June01, 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 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.

Agree with the answer given by Mr. Vindo jetley.

I agree with Mr. Vinod answer