The following
Scheme is published for the information of all concerned:- CHAPTER I: INTRODUCTION (i)
The Scheme shall be known as the Credit Guarantee
Fund Scheme for Skill Development (CGFSSD). (ii)
It shall come into force from the date of
notification by the Government of India. (iii)
Skill Loans sanctioned on or after July 15, 2015
with features as under will be eligible for coverage under the Scheme. The minimum and
maximum loan limit under this Scheme is Rs.5000/- and Rs.1,50,000/-
respectively, without any collateral security and/or third party guarantee.
However, the Fund reserves the right to revise the loan limit as and when
required. The Interest Rate
to be charged by the Member Lending Institution should not be more than 1.5 %
p.a. over the Base Rate. For the purposes
of this Scheme - (i)
Skill Loan Scheme is the scheme circulated by
Indian Banks' Association (IBA) vide its letter no RB/CIR/SLS/1051 dated
July 10, 2015 to its member banks. (ii)
"Amount in Default" means the loan amount
outstanding in the loan account(s) of the borrower inclusive of accrued
interest, as on the date of the account becoming NPA, or the date of lodgment
of claim application whichever is lower or such other amount as may be
specified by the Fund for preferring any claim against the guarantee cover
subject to maximum of 'Guarantee Cover'. (iii)
Base Rate" for a lending institution means the
Base Rate so declared by that lending institution from time to time as per
Reserve Bank of India guidelines based on which interest rate applicable for
the loan will be determined. (iv)
"Eligible Borrower" means new or existing
borrower with Indian Nationality who meets eligibility criteria prescribed
under "Skill Loan Scheme" having the minimum qualification as
required by the enrolling institutions/organizations as per National Skill
Qualification Framework (NSQF) and who has executed loan documents with the
lending institution to avail skill loan. Parents/guardians will be the
co-borrowers. (v)
"Collateral security" means the security
provided in addition to personal obligation of borrower/co-borrower. (vi)
"Fund" means the Credit Guarantee Fund
for Skill Development Loans set up by Government of India with the purpose
of guaranteeing payment against default in Skill Loan, extended by the lending
institution(s) to the eligible borrowers. (vii)
"Guarantor" means a person acceptable to
the bank, who guarantees to repay the skill loan, in the event of failure
of the borrower to repay. (viii)
"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. (ix)
"Lending institution(s)" means member
banks (public sector banks, private sector banks and foreign banks) of
IBA. (x)
"Material date" means the date on which
the guarantee fee on the amount covered in respect of eligible borrower
becomes payable by the institution to the Fund. (xi)
"Non Performing Assets" means an asset
classified as a non-performing based on the instructions and guidelines
issued by the Reserve Bank of India from time to time. (xii)
"Scheme" means the Credit Guarantee Fund
Scheme for Skill Development Loans. (xiii)
NCGTC means National Credit Guarantee Trustee
Company set up on March 28, 2014 by Government of India under the Companies Act
1956 to act as the Trustee to operate the Credit Guarantee Funds for
Educational Loans, Skill Development Loans and any other funds to be set up by
Government of India from time to time. (xiv)
Lock-in-period means the period during which no
invocation of guarantee can be made. A lockin-period of 12 months has been
stipulated from the date of commencement of guarantee cover or end of period of
moratorium of interest, whichever is later. (xv)
Accordingly, all matters pertaining to the
operations of CGFSSD would be undertaken by NCGTC on behalf of the said Fund
Trust. CHAPTER II SCOPE AND EXTENT OF THE SCHEME (i)
Subject to the other provisions of the Scheme,
NCGTC undertakes, in relation to Skill Loans ranging from Rs.5000/- to
Rs.1,50,000/- extended to an eligible borrower by a Member Lending Institution
(MLI) which has entered into the necessary agreement for this purpose with
NCGTC, to provide guarantee against default in repayment of skill loans
extended by the lending institutions. (ii)
NCGTC reserves the right to accept or reject any
proposal referred by the lending institution which otherwise satisfies the
norms of the Scheme. The Fund shall
cover skill loans extended by Member Lending Institution(s) to an eligible
borrower on or after entering into an agreement with NCGTC, without any
collateral security and/or third party guarantee, provided that (i)
The course is run by Industrial Training Institutes
(ITIs), Polytechnics or in a school recognized by central or State
education Boards or in a college affiliated to recognized university, training
partners affiliated to National Skill Development Corporation (NSDC)/Sector
Skill Councils, State Skill Mission, State Skill Corporation, preferably
leading to a certificate / diploma / degree issued by such organization as per
National Skill Qualification Framework (NSQF). The Government of India / State
Governments may, from time to time, notify institutes/organizations for the
purpose. Courses run by
above mentioned Training Institutes (in 6.1) aligned to National Skill
Qualification Framework (NSQF) shall be covered by the Skill Loan. There is no
minimum course duration. (ii)
The lending institution applies for guarantee cover
in respect of skill development loans disbursed 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. (iii)
as on the material date, (a)
There are no overdue in respect of the account to
the lending institutions and / or the loan has not been classified as a
Non-performing asset in the books of the lending institution, and/or (b)
The activity of the borrower for which the credit
facility was granted, has not ceased; and / or (c)
The credit facility has not wholly or partly been
utilized for adjustment of any debts deemed bad or doubtful of recovery,
without obtaining a prior consent in this regard from NCGTC. The following
Skill Loans shall not be eligible for being guaranteed under the Scheme: - (i)
Any Skill Loans 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. (ii)
Any Skill Loans, 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. (iii)
Any Skill loans which have been sanctioned by the
lending institution with interest rate more than 1.5% p.a. over the Base
Rate of the lending institutions. However, the Fund may revise such ceiling
benchmark parameters from time to time keeping in view the prevailing interest
rate scenario, Base Rates of lending institutions and RBI's Credit Policies. A Member Lending
Institution shall be entitled to a guarantee in respect of eligible Skill Loans
granted by it after it has entered into an agreement with NCGTC in such form as
specified by NCGTC. (i)
The lending institution shall evaluate and sanction
the Skill Loans in accordance with the "Skill Loan Scheme" and
conduct the account(s) of the borrowers with normal banking prudence and due
diligence. (ii)
The lending institution shall pool all its
outstanding skill loans extended against sanctions effected on or after
July 15, 2015, but within the parameters prescribed at para no. 6(ii) as at the
end of a calendar quarter into a portfolio and ensure to submit the information
required by NCGTC for giving guarantee cover with regard to the Skill
borrowable account. (iii)
The MLI would need to furnish a Management
Certificate [as mentioned in point 10(ii)] certifying the following: (a)
All accounts in the portfolio conform to the Skill
Loan Scheme and such loans were sanctioned on or after July 15, 2015. (b)
All accounts covered in the initial portfolio as
well as new accounts added in the portfolio subsequently, are standard
accounts. (c)
All accounts which have turned NPA within the
portfolio and for which claim has not been lodged have been included in the
portfolio on which the guarantee fee is payable. (iv)
The lending institution shall closely monitor the
borrower's account and follow up for repayment. (v)
The lending institution shall ensure linkage of
every skill loan with Aadhar number and register the
borrower's/co-borrower's name with an appropriate credit information bureau. (vi)
The lending institution shall ensure that the
guarantee claim in respect of the Skill Loans given to the borrower is
lodged with NCGTC in the form and in the manner and within such time specified
by NCGTC in this regard and that there shall not be any delay on its part to
notify the default in the borrowers account which shall result in the Fund
facing higher guarantee claims. (vii)
The payment of guarantee claim by NCGTC 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 with applicable interest. The lending institution shall
exercise all the necessary precautions and maintain its recourse to the
borrower for entire amount of skill loan owed to it and initiate such necessary
actions for recovery of the outstanding amount, including such action as may be
advised by NCGTC. (viii)
The lending institution shall comply with such
directions as may be issued by NCGTC, from time to time, for facilitating
recoveries in the guaranteed account, or safeguarding its interest as a credit
guarantor, as NCGTC may deem fit and the lending institution shall be bound to
comply with such directions. (ix)
The lending institution shall, in respect of any
guaranteed account, exercise the same diligence in recovering the dues,
and safeguarding the interest of the Fund in all the ways open to it as it
might have exercised in the normal course if no guarantee had been furnished by
the Fund. 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 Fund as the guarantor. In
particular, the lending institution should intimate NCGTC while entering into
any compromise or arrangement, which may have effect of discharge or waiver of
personal guarantee(s). Further the lending institution shall secure for the
Fund or its appointed agency, through a stipulation in an agreement with the
borrower or otherwise, the right to publish the defaulted borrowers' names and
particulars by NCGTC. (i)
For availing the guarantee coverage, the Member
Lending Institution shall pay Guarantee Fee of 0.125% per calendar quarter
(i.e. 0.50% p.a.) on the quarter end outstanding portfolio balance (skill
loans). (ii)
Guarantee fee shall be paid within 16 days from the
end of the calendar quarter. (The MLI would need to furnish a Management
Certificate within 10 days from the end of the calendar quarter, after which, a
Credit Guarantee Demand Advice Note [CGDAN] would be issued by NCGTC within 3
day of receipt of Management Certificate and subsequently, the guarantee fee
shall be payable within 3 days from the issue of CGDAN) (iii)
All cases within the portfolio for which the
guarantee fee has been paid by MLI, would be covered under the credit
guarantee scheme subject to the loan accounts within the portfolio being
eligible under the Skill Loan Scheme. (iv)
Guarantee fee would be paid on the quarterly
balance (including on accounts which have turned NPA) and Guarantee will
be valid up to the end of that quarter. Guarantee fee with respect to NPA
accounts in the portfolio would continue to be paid till lodgment of claim for
such accounts. (v)
However, the Fund reserves the right to charge
different guarantee fees in future for different educational institutions
/ vocational / skill development training institutions depending on their risk
rating/risk profile. (vi)
Provided further that in the event of non-payment
of Guarantee Fee within the stipulated time or such extended time that may
be agreed to by NCGTC on such terms, liability of the Fund to guarantee such
credit facility would lapse in respect of those credit facility against which
the Guarantee Fee are due and not paid, (vii)
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, such deficiency / shortfall shall be paid by
the eligible lending institution to the Fund together with interest on such
amount at a rate of 4% over and above the Bank Rate. Any amount found to have
been paid in excess would be refunded by the Fund. In the event of any
representation made by the lending institution in this regard, NCGTC shall take
a decision based on the available information with it and the clarifications
received from the lending institution. Notwithstanding the same, the decision
of NCGTC shall be final and binding on the lending institution. (viii)
The amount equivalent to the guarantee fee payable
by the Member Lending Institution will be borne by the Member Lending
Institution. (ix)
The guarantee fee once paid by the lending
institution to NCGTC is non-refundable, except under certain circumstances
like - (a)
Excess remittance, (b)
Remittance made more than once against the same
Skill Loan, and (c)
Annual guarantee fee not due. The Fund shall
provide guarantee cover to the extent of 75% of the amount in default. The Fund
reserves the right to modify the same. The guarantee cover will commence from
the date of payment of guarantee fee and shall run through the agreed tenure of
the Skill Loans. (i)
The lending institution may invoke the guarantee in
respect of Skill loan 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, after 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 12 months from either the end
of period of moratorium of interest or the date of commencement of guarantee
cover in respect of loan covered, whichever is later, has elapsed. A lock-in
period of 12 months has been stipulated from the date of commencement of
guarantee cover or end of period of moratorium of interest, whichever is later (c)
The amount due and payable to the lending
institution in respect of the Skill Loan 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 NCGTC in respect of the said Skill Loan 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 NCGTC. (ii)
The claim should be preferred by the lending
institution in such manner and within such time specified/to be specified
by NCGTC in this behalf. (iii)
Any Claim under the Credit Guarantee Scheme for
Skill Development would be settled at 100 % of the guaranteed amount at
one go, subject to the receipt of a certificate from the MLI to the effect that
all avenues of recovering the amount in default have been exhausted; that there
is no further scope for recovering the default amount and that the claim is
found in order and complete in all respects. (iv)
In the event of default, the lending institution
shall exercise its rights, if any, to take over the assets of the
borrowers and the amount realized, if any, from the sale of such assets or
otherwise shall first be credited in full by the lending institution to NCGTC
before it claims the guaranteed amount. (v)
The lending institution shall be liable to refund
the claim released by NCGTC together with penal interest at the rate of 4%
above the prevailing Bank Rate, if such a recall is made by NCGTC in the event
of deficiencies having existed in the matter of appraisal / renewal / follow-up
/ conduct of the Skill Loan or where lodgment 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 NCGTC, from the date of the
initial release of the claim by NCGTC to the date of refund of the claim. (vi)
The Guarantee Claim received directly from the
branches or offices other than respective Head Office / Regional Office or
such other designated Office/Branches of Lending Institutions will not be
entertained. (i)
The lending institution shall furnish to NCGTC, as
and when required by NCGTC, the details of its efforts for recovery,
realizations and such other information. NCGTC shall not exercise any
subrogation rights and the responsibility of the dues shall rest with the
lending institutions. (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 Fund or not, such payments shall, for
the purpose of this clause, be deemed to have been appropriated by the lending
institution to the 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 NCGTC
shall be paid without delay, and if any amount due to NCGTC remains unpaid
beyond a period of 30 days from the date on which it was first recovered,
interest shall be payable to NCGTC by the lending institution at the rate which
is 4% over and above the Bank Rate for the period for which payment remains
outstanding after the expiry of the said period of 30 days. The amount
received from the lending institutions shall be appropriated in the order in
which the AGF, penal interest and other charges have fallen due. If the AGF and
the penal interest have fallen due on the same date, the appropriation shall be
made first towards AGF and then towards the penal interest and finally, towards
any other charges payable in respect of the eligible credit facility. Where subsequent
to NCGTC having released a sum to the lending institution towards the amount in
default in accordance with the provisions contained in Para 12 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
NCGTC, after adjusting towards the legal costs incurred by it for recovery of
the amount. The Fund shall appropriate the same first towards the pending AGF,
penal interest, and other charges due to the Fund, 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
NCGTC and the lending institution are in the proportion of 75% and 25%
respectively. (i)
If the liabilities of a borrower to the lending
institution on account of Skill Loan 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 Skill Loan and any other
terms and conditions, if any, subject to which the Skill Loan can be guaranteed
under the Scheme are not satisfied after the said transfer or assignment, the
guarantee in respect of the Skill Loan 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
Skill Loan under the Scheme, the liability of NCGTC in respect of Skill Loan
granted to him/her 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 NCGTC fixed under this Scheme. (i)
The lending institution shall submit such
statements and furnish such information as and when required by NCGTC in
connection with Skill Loan under this Scheme. (ii)
The lending institution shall also furnish to NCGTC
all such documents, receipts, certificates and other writings as and when
required by NCGTC 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)
NCGTC 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 through the officers of NCGTC
or any other person appointed by NCGTC for the purpose of inspection. Every
officer or other employee of the lending institution or the borrower, who is in
a position to do so, shall make available to the officers of NCGTC 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/her possession. (i)
Any guarantee given by the Fund 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 Fund be bound by the conditions imposed
under the Scheme. (i)
The Fund reserves to itself the right to modify,
cancel or replace the Scheme, so 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 Fund
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 issued / invoked as on
the date of such alteration. (iii)
In the event of the Scheme being cancelled, no
claim shall lie against the Fund in respect of facilities covered by the
Scheme, unless the provisions contained in Clause (i) and (ii) of Para 12 of
the Scheme are complied with by the lending institution prior to the date on
which the cancellation comes into force. 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 Fund shall be final. In respect of any
matter not specifically provided for in this Scheme, the Fund may make such
supplementary or additional provisions or issue such instructions or
clarifications as may be necessary for the purpose of the Scheme. CREDIT GUARANTEE FUND SCHEME FOR SKILL
DEVELOPMENT (CGFSSD)
PREAMBLE