Msme Advances: Canara Bank Officers' Association Promotion Study Material - 2018

CANARA BANK OFFICERS’ ASSOCIATION
PROMOTION STUDY MATERIAL - 2018
MSME ADVANCES
 MSME sector constitutes an important segment of our national economy and has shown
continued dynamism in terms of growth in number of enterprises, production,
employment generation and its contribution to the country’s manufacturing output and
exports.
 To ensure balanced growth of the MSMEs, Govt. of India has enacted the Micro, Small
and Medium Enterprises Development (MSMED) Act, 2006 on 16.06.2006 (notified on
02.10.2006).
 With the enactment of MSMED Act 2006, Services sector has become part of Micro,
Small & Medium Enterprises.
 The MSMEs engaged in manufacturing or production and providing or rendering of

services are defined as per MSMED Act 2006 for the purpose of bank credit.
Definition of the MSME Sector as per MSMED Act, 2006.
A. Direct Finance (Loans/advances granted directly to MSMEs):
Enterprise Manufacturing Services

Enterprises engaged in the Enterprises engaged in providing or
Manufacture or production, rendering of services and whose
processing or preservation of goods original investment in equipment is as
and whose investment in plant specified below, irrespective of
and machinery is the original cost location of the unit:
as specified below, irrespective of
location of the unit.
Investment in plant and machinery Investment in equipment does not
Micro
does not exceed Rs.25 lacs. exceed Rs.10 lacs.
Investment in plant and machinery is Investment in equipment is more
Small more than Rs.25 lacs but does not than Rs.10 lacs but does not exceed
exceed Rs.5 crore. Rs.2 crore.
Investment in plant and machinery is Investment in equipment is more
Medium more than Rs.5 crore but does not than Rs.2 crore but does not exceed
exceed Rs.10 crore. Rs.5 crore.
Note (1): Note (2):
Investment in plant and machinery is Investment in equipment is the
the original cost excluding land and original cost excluding land &
building and the items specified building and furniture, fittings and
by the Ministry of MSME vide other items not directly related to the
its notification service rendered or as may be notified
No. S.O.1722 (E) dated 05.10.2006. under the MSMED Act, 2006.
Note:
(3) Khadi and Village Industries Sector (KVI) - All advances granted to units in the KVI
sector, irrespective of their size of operations, location and amount of original investment in
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Plant & Machinery / equipments to be considered as advances extended to Micro Enterprises

sector.
(4) RBI clarified that for ascertaining the investment in plant and machinery for
classification of an enterprise as Micro, Small and Medium, the following documents could
be relied upon: (H.O Cir 362/2017)
i) A copy of the invoice of the purchase of plant and machinery; or
ii) Gross block for investment in plant and machinery as shown in the audited accounts; or
iii) A certificate issued by a Chartered Accountant regarding purchase price of plant and
machinery
Items to be included/excluded while calculating the original investment in P & M :
Included
The investment in establishing of windmill/s to generate electricity for captive

consumption or partly for captive consumption and remaining power to sell to Electricity
Boards/others are to be included in the investment in P&M for the purpose of computation
of investment limit for classification as Micro, Small and Medium Enterprises under MSMED
Act, 2006.
Ministry of MSME, Govt. of India has also clarified as under:
a) In case the wind mill is established solely for the purpose of selling its generated
power to Electricity Boards or others, in premises, separate to the unit where other
products are also manufactured, the investment in such wind mill shall be considered as
an investment in new enterprises. In such case, the enterprise may be advised to file
separate Entrepreneur’s Memorandum for such wind mill (enterprise) and may be
classified as Micro/Small/Medium Enterprises, as the case may be, engaged in
production/generation of electricity based on the investment made therein.
b) In case, a wind mill is established in the premises being used for manufacturing of other
product/s, the investment in such unit may be included in the investment in plant and
machinery of that manufacturing unit for the purpose of classifying it as Micro, Small
and Medium Enterprises.
Excluded
While calculating the original investment in P& M the following cost shall be excluded:
i. Equipment such as tools, jigs, dyes, moulds and spare parts

ii. Installation of plant and machinery;
iii. Research and development equipment and pollution control equipment;
iv. Power generation set and extra transformer installed as per the regulations of the
State Electricity Board;
v. Bank charges and service charges paid to the National Small Industries Corporation
(NSIC) or the State Small Industries Corporation Gas producer plant;
vi. Procurement or installation of cables, wiring, bus bars, electrical control panels
(not mounted on individual machinery), oil circuit breakers or miniature circuit
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breakers which are necessarily to be used for providing electrical power to the plant
and machinery or for safety measures;
vii. Gas producer plant;
viii. Transportation charges (excluding sales-tax or value added tax, excise duty) for
indigenous machinery from the place of their manufacture to the site of the
enterprise;
ix. Charges paid for technical know-how for erection of plant and machinery;
x. Such storage tanks which store raw materials and finished products only and are
not linked with the manufacturing process; and
xi. Fire fighting equipment.
While calculating the investment in plant and machinery referred to in (1) above, the
original price thereof, irrespective of whether the plant and machinery are new or second
hand, shall be taken into account provided that in the case of imported machinery, the
following shall be included while calculating the value, namely:
 Import duty (excluding miscellaneous expenses such as transportation from the port to
the site of the factory, demurrage paid at the port);
 Shipping charges;
 Customs clearance charges; and
 Sales tax or Value Added Tax
B. Other Finance (MSME)
1) Loans to entities involved in assisting the decentralized sector in the supply of inputs
to and marketing of outputs of artisans, village and cottage industries.
2) Loans to co-operatives of producers in the decentralized sector viz. artisans, village

and cottage industries.
3) Loans sanctioned by banks to MFIs for on-lending to MSME sector subject to

compliance of following conditions.
a) Margin cap at 12% for all MFIs. The interest cost is to be calculated on average
fortnightly balances of outstanding borrowings and interest income is to be
calculated on average fortnightly balances of outstanding loan portfolio of qualifying
assets.
b) Interest cap on individual loans at 26% per annum for all MFIs to be calculated on a
reducing balance basis.
c) Only three components are to be included in pricing of loans viz.,
d) processing fee not exceeding 1% of the gross loan amount, the interest charge
andthe insurance premium.
e) The processing fee is not to be included in the margin cap or the interest cap of
26%.
f) Only the actual cost of insurance i.e. actual cost of group insurance for life, health
and livestock for borrower and spouse can be recovered; administrative charges may
be recovered as per IRDA guidelines.
g) There should not be any penalty for delayed payment
h) No Security Deposit / Margin are to be taken
i) Loans granted by banks to NBFCs for on-lending to Small and Micro Enterprises.
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TARGET FOR LENDING TO MICRO, SMALL AND MEDIUM ENTERPRISES SECTOR:
 Priority sector advances (which include the micro and small enterprises (MSE) sector)
constitute 40 per cent of Adjusted Net Bank Credit (ANBC) or credit equivalent amount
of Off-Balance Sheet Exposure, whichever is higher.
 Mandatory target for lending to Micro & Small Enterprises stipulated. 10% annual
growth in Micro Number of Accounts, 20% Y-o-Y growth in Micro & Small Enterprises
outstanding and Micro Enterprises share constitute 60% of total outstanding under MSE
as at March of previous year.
 Domestic Commercial Banks are required to achieve 7.5 % of ANBC target for Micro
Enterprises (Include KVIC), by March 2017.
 In order to ensure that sufficient credit is available to Micro Enterprises within the Micro
and Small Enterprises sector, branches/offices should ensure that share of Micro
Enterprises in total lending to Micro and Small Enterprises sector is as under:
CLASSIFICATION OF FINANCE TO MSME SECTOR (H O Cir 235/2015, 305/2016)
Loans/advances (both Fund & Non Fund Based)

I Classification
(Direct/Other finance) to
a Micro, Small and Medium Enterprises engaged in Priority
Manufacturing Sector
b Loans to food and agro processing units above Rs.100 crores per Priority
borrower/unit provided the unit satisfies investment criteria as per
MSMED Act 2006.
c loans up to Rs.5 crore per borrower / unit to Micro and Small Priority
Enterprises and Rs.10 crore to Medium Enterprises engaged in
providing or rendering of Services Sector
d Khadi and Village Industries Sector(KVI) - All loans to units in the Priority
KVI sector will be eligible for classification under the sub-target
of 7.5 percent prescribed for Micro Enterprises under priority
sector
e Other Finance to MSMEs Priority
(i) Loans to entities involved in assisting the decentralized sector
in the supply of inputs to and marketing of outputs of artisans,
village and cottage industries.
(ii) Loans to co-operatives of producers in the decentralized sector
viz. artisans, village and cottage industries.
(iii) Loans sanctioned by banks to MFIs for on-lending to MSME
sector as per the conditions specified above.
(iv) Credit outstanding under General Credit Cards (including
Artisan Credit Card, Laghu Udyami Card, Swarojgar Credit Card,
and Weaver’s Card etc. in existence and catering to the non-farm
entrepreneurial credit needs of individuals).
(v) Outstanding deposits with SIDBI on account of priority sector
shortfall.
Note:
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 MSME will enjoy priority sector classification upto 3 years after they grow out of MSME
category.
II Loans/advances (both fund and non fund based) Classification
(Direct finance) to
a Micro and Small Enterprises (MSE) – Services (including Retail Non-Priority

Trade) – where Bank loan is above an aggregate limit of Rs.5
crores per unit, provided the unit satisfies investment criteria
as per MSMED Act 2006.
b Medium Service Enterprises with aggregate sanctioned limit of Non-Priority
above Rs.10 crores per borrower/unit, provided the unit
Satisfies investment criteria as per MSMED Act 2006.
Filing Of Memorandum By MSME Units (Cir 275/07, 212/2011, 579/15, 305/16)
 With the introduction of MSMED ACT, Filing of memorandum (Registration) is not

mandatory in the case of Micro and Small units in both Manufacturing / Services Sector
and also for Medium size units in Services sector.
 It is only optional or in other words, filing of memorandum is compulsory only for
medium industry in manufacturing sector.
 Entrepreneurs’ Memorandum (EM-I) and EM-II have been replaced by Udyog aadhhar
Memorandum (UAM) for the MSME enterprises registered after 18/09/15. Though it
contain “Aadhaar” in its name, it is not mandatory to obtain aadhaar.
TIME NORMS FOR DISPOSAL OF MSME PROPOSALS: (HO Cir 533/2017)
(In Days)
Sanctions at
RO / CO Head Office
Loan amount
Category of Processing at Processing at
borrower Branc
Tot Tota
h Bran RO Bran RO/C
al HO l
ch /CO ch O
Up to Rs Micro &
15 15 NA 15 15 NA NA 15
25000/- Small
Medium 15 15 NA 15 15 NA NA 15
Beyond Rs Micro &
15 7 8 15 3 4 8 15
25000/-, up to Small
Rs 5 alcs Medium 15 10 20 30 7 10 13 30
Beyond Rs 5 Micro &
30 15 15 30 7 10 13 30
alcs, up to Rs Small
25 lacs Medium 30 15 30 45 10 15 20 45
Above Rs 25 Micro &
30 15 30 45 10 15 20 45
lacs Small
Medium 30 15 30 45 10 15 20 45
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 Provided such applications are complete in all respects.

 Branches to issue Token of Service on receipt of application
 Rejection Of Credit Proposals of MSME is subject to concurrence of the next higher
authority.
SECURITY NORMS FOR MSME ADVANCES:
 In respect of loans/advances to Micro and Small Enterprises (including loans sanctioned

to Khadi & Village Industries and other Govt. sponsored schemes), no collateral
security/third party guarantee is insisted, as under:
i. Upto Rs.10 lakhs (which is mandatory).

ii. Upto Rs.25 lakhs in respect of units whose track record and financial position are
good as per Bank records.
iii. Up to Rs.200 lakhs in respect of Micro & Small Enterprises whose borrowal
accounts are covered under CGTMSE.
In respect of credit facilities extended to Micro & Small Enterprises (MSEs) wherever
collateral security and / or third party guarantee is not obtained, coverage offered by
Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE) is to be necessarily
taken.
 In respect of loans/advances to Micro, Small Enterprises other than above a (i) to (iii)
and Medium Enterprises, the guidelines for obtaining collateral security/third party
guarantee on case to case basis as determined by the Bank shall continue.
 Coverage under Credit Guarantee Fund for Micro and Small Enterprises (CGTMSE):
i. Loans to Micro & Small Enterprises upto Rs.10 Lakhs coverage under CGMSE is
mandatory (subject to exclusions noted here below).
ii. Loans/advances granted upto Rs.200 lakhs to Micro and Small Enterprises without
collateral security and/or third party guarantee are to be covered under CGMSE
unless the borrower provides primary security or primary and collateral security put
together in the form of land and building to the extent of 75 % of the sanctioned
limit, in addition to the security of assets created out of our finance (exposure, if
more than one limits are sanctioned) and the borrower should be rated as
LOW/NORMAL or MODERATE Risk and all the accounts are under standard category.
(H O Cir 589/2017)
iii. Presently, CGTMSE cover is not available for credit facilities extended to retail
traders, educational institutions, training institutes, training-cum-incubator centres,
Self Help Groups (SHG), Joint Liability Groups (JLG) and Medium Enterprises.
MoU for due diligence services of micro, small & medium enterprises
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 MSE units who approach our Bank for the first time for the credit facility requirement of
above Rs.10 lakhs and upto Rs.100 Lakhs and eligible to be covered under CGMSE are
to be brought under Due Diligence Service.
 Bank has entered MoU with M/s CARE Ltd , CRISIL Limited, M/S ONICRA Credit Rating
Agency of India Ltd , M/S IRR advisory Services Pvt Ltd , M/S Brickwork Ratings India
Pvt Ltd and M/s SMERA for Due Diligence Services of Micro, Small & Medium
Enterprises. ( acumen – a new company added )
TAKE OVER NORMS FOR MSME ADVANCES
DELEGATION FOR TAKEOVER (MSME)

Risk Rating Grade Normal Sanctioning Sanctioning Authority for
Authority (SA) takeover
Upto Normal Risk Respective SA Respective SA
(Internal) / upto BBB
(ECAI)
Upto and including DM- DM-CO-CAC / AGM-CO-CAC
CO-CAC /AGM-CO-CAC subject to post sanction
clearance from DGM-CO-CAC
DGM-CO-CAC DGM-CO-CAC subject to post
sanction clearance from GM-
Moderate Risk
CO-CAC
DGM-CO-CAC (Circle DGM-CO-CAC (Circle head)
head)
GM / CGM-CO-CAC and GM / CGM-CO-CAC and
above above
High Risk No powers
 In case of proposals for switch over from other Bank where the proposed borrower has
cleared liabilities in previous 3 months, shall be considered as takeover of account and
existing take over norms shall be applicable.
Takeover Compliance Chart
Sl.No Norms Compliance

1. Assess standing of the borrower, their credit worthiness, Credit
Risk, collateral security, safety of the advance
1. Credit Information from transferor bank and satisfactory Credit
Information from the transferor bank and specific approval of
ECGC (wherever applicable)
2. Certificate from the statutory auditors of the borrower furnishing
the details of limits/liabilities, overdue securities charged etc and
counter check the same with other bank wherever possible)
3. For Corporate, ABS filed with ROC to be verified for previous three
years
4. Where transfer of securities and/or mortgaged property from the
transferor bank is involved it shall be ensured that the securities
are chargeable and/ or mortgageable in favour of Bank and take
steps to create charge
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5. In respect of take over of TL, the remaining repayment period shall

not be extended beyond the period of the existing loan
6. Profit earning should be commensurate with that of the similar
units
7. CR should be atleast 1.33 per latest ABS (1.25 for turnover
method accounts). Same trend to be projected. Can be relaxed
upto 1
8. DER should not be more than 2 as per latest ABS and the same
trend is to be projected. Exceptionupto 3 may be permitted
selectively by respective sanctioning authority
9. The account must have been classified as Standard Asset in the
transferor bank at the time of take over.
10. For term loan takeover, projection and performance are to be in
tune with the actuals. If vast variation is observed, reappraisal to
be done.
If vast difference in actuals vis-s-vis projections, time and cost
overrun are observed, takeover to be avoided
11. Where Project undertaken is yet to be completed may not be
taken. Exceptional cases, may be taken after undertaking fresh
project appraisal by PAG
12. Pass sheet for a minimum period of one year in case of term loan
and 6 months in case of WC limits of borrower – to be obtained
and verified.
13. In case of takeover of term loans the repayment capacity has to be
established by evaluating the profitability and cash flow and should
satisfy the relevant bench mark parameters of the Bank
14. ABS for the previous 3 years shall be obtained and analysed. It
should not be older than 6 months. If ABS is not available,
provisional financial statements certified by auditors shall be
obtained
15. Reasons for switch over shall be ascertained and satisfied. Shifting
of accounts from banks during last 5 years shall not be more
than one occasion during the last five years or period of
existence of the borrower unit, whichever is less. Further, gap to
last switch over shall be a minimum of 2 years.
The stipulation of minimum of 2 years shall not be applicable in the
following cases :
(i) in case of those good borrowers who have exited our Bank
for better pricing and who had a good relationship with our
Bank. However, branches/ offices to ensure that while
taking over of such accounts, the financials of the borrowal
accounts has continued to be satisfactory.
(ii) Entities in existence for a period less than 2 years
16. Sanction communication of previous banks including modifications,
if any, for the last three years to be obtained & analyzed.
17. Wherever Chief Executive Officer and /or Independent Directors
have resigned in one prior year, enquiries to be made in detail
regarding their exit.
18. Need for proper assessment of limits & to secure Adequate
collateral comfort while permitting substantial enhancement / fresh
limits and the same need to be highlighted.
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19. The collaterals offered to the previous lender shall be passed on.
However if the same cannot be insisted, SA may permit alternate
securities with proper and justifiable reasons.
Additional limit- additional securities depending on merits
No reduction in margin and no dilution of securities as far as
possible.
20. Securities to be revalued at the time of take over and distress
value to be ascertained.
21. Stock audit to be carried out for take over of WC limits as a pre
release condition.
22. OPL to be obtained before take over. If on consortium basis OPL
from leader bank to be obtained. Taking over of share of Leader
bank to be avoided totally.
23. An opinion from the panel advocate after inspection/ verification of
documents for ensuring that they are in order and as per the
requirement of the Bank.
24. No cases should be taken over by a bank from any bank where any
of the ED or CMD have worked earlier. In case of need to be taken
over, the same is to be put up to Board with specific reasons
justifying the need.
25. In case of proposals for switch over from other Bank where the
proposed borrower has cleared liabilities in previous 3 months,
shall be considered as takeover of account and existing take over
norms shall be applicable
26. Additional exposure while takeover and also adhoc / enhancement
during first year of takeover can be permitted by next higher
authority
27. No NOC/Consent letter need be insisted from other banks/Financial
Institutions for MSME borrowers
REJECTION OF CREDIT PROPOSALS UNDER MSME:
 Applications for credit facilities from SC/ST customers shall not be rejected at branch
level and such applications shall be referred to the next higher authorities for their prior
decision / permission. However, proposals of CAC of the Board/MC Powers may be
rejected by C&MD or ED in the absence of C&MD.
 Whenever applications for loans under Govt sponsored schemes are rejected by the
Branch Manager himself / herself for valid reasons, a register is to be maintained to this
effect which shall be examined by the controlling authorities during their branch visits.
 Rejection of export credit proposals shall be immediately reported to C&MD through the
concerned Wing at HO.
 Rejection of credit proposals from MSME is subject to concurrence of the next higher
authority. However, proposals of CAC/MC powers may be rejected by MD &CEO or ED in
the absence of MD & CEO.
 Rejection of proposals for educational loan is subject to concurrence of the next higher
authority.
 Rejection of credit proposals by the branch level authorities shall be recorded in a
register (web based NB-139 package) maintained for this purpose, which shall be
reviewed by the controlling authorities visiting branches.
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RISK RATING OF MSME ACCOUNTS: (H O Cir 493/2017)
 The risk rating of eligible borrowers is a pre sanction exercise. All borrowers with
exposure of Rs.2 Lakhs and above are rated individually and under the appropriate risk
rating models developed for the purpose. The individual borrower ratings are subject to
annual review.
Internal Rating Model Borrowal accounts with sanctioned/ proposed limit

Risk Assessment Model (RAM) Above Rs. 2 Crore
Manual Model Above Rs. 20 lakhs and not more than Rs. 2 Crores
Small Value Model Above Rs. 2 Lakhs and not more than Rs.20 Lakhs
Portfolio Model Up to 2 Lakhs (at HO Level)
 All exposures above Rs.5 Crores are to be mandatorily rated External Credit Assessment
Institutions (ECAI).
 Bank has also entered into memorandum of understanding with various credit rating
agencies for SME rating of the Micro, Small & Medium Enterprises. Subsidy from NSIC is
available towards rating fee in respect of Micro & Small enterprises.
PRESENT RATE OF INTEREST (185/2016 & 532/2016, 579/2017)
Overnight MCLR 7.85%

One month MCLR 7.90%
Three months MCLR 8.10%
Six months MCLR 8.15%
One year MCLR 8.30%
w.e.f 07.12.2017
RATE OF INTEREST FOR MSME SECTOR: (H.O Cir 185/2016, 532/2016 &
579/2017)
A) ROI ON LOANS AND ADVANCES UPTO Rs.2 LACS
MANUFACTURING
Exposure Working Capital Term Loan

Micro and Medium Micro and Medium
Small Small
Upto Rs.50000/- MCLR+0.95 MCLR+0.95 MCLR+1.20 MCLR+1.20
Above Rs.50000/- MCLR+0.95 MCLR+0.95 MCLR+1.45 MCLR+1.45
upto Rs.2 lacs
SERVICES
Exposure Working Capital Term Loan

Micro and Medium Micro and Medium
Small Small
Upto Rs.50000/- MCLR+0.95 MCLR+0.95 MCLR+1.20 MCLR+1.20
Above Rs.50000/- MCLR+0.95 MCLR+0.95 MCLR+1.45 MCLR+1.45
upto Rs.2 lacs
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B) EXPOSURE ABOVE Rs.2 LAKHS AND UPTO Rs.2 CRORES (BOTH

MANUFACTURING / SERVICES)
1) FOR EXPOSURE ABOVE RS.2 LAKHS UPTO RS.1 CRORES
Rating Grade ROI

Low Risk 3 MCLR+1.55
Normal Risk MCLR+2.15
Moderate Risk MCLR+2.80
High Risk 1 MCLR+3.80
High Risk 2 & 3 MCLR+5.65
2) FOR EXPOSURES ABOVE RS.1 CRORES UPTO RS.2 CRORES
(ROI linked to value of immovable property (freehold) mortgaged / approved collaterals

viz., Life Insurance Policies, NSCs, KVPs, PSU Bonds, as security either as prime or collateral
or in aggregate )
Revised Spread
% of Value of immovable property/approved
collaterals in proportion to the exposure
Rating Grade Upto 50% 51% - 76% - >100%
75% 100%
Low Risk 3 MCLR+2.60 MCLR+2.50 MCLR+2.30 MCLR+2.05
Normal Risk MCLR+2.90 MCLR+2.75 MCLR+2.55 MCLR+2.30
Moderate Risk MCLR+3.15 MCLR+3.00 MCLR+2.80 MCLR+2.55
High Risk 1 MCLR+4.90 MCLR+4.70 MCLR+4.50 MCLR+4.25
High Risk 2 & 3 MCLR+5.90 MCLR+5.70 MCLR+5.50 MCLR+5.25
For term loan the following liquidity premium to be loaded to the card rates
additionally
Repayment Premium
More than 1 year upto 5 years 0.40%
More than 5 years 0.85%
Notes:
1. Concession of 0.25 % in applicable rate of interest in CGTMSE covered accounts upto an

exposure of Rs.2.00 Crs is available, subject to the condition that the ultimate rate of
interest shall not fall below the respective MCLR.
2. A reduction of 0.50% in the applicable rate of interest on loans and advances to Women
Entrepreneurs under Micro and Small enterprises (both manufacturing and
services) to be extended to new loans.
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C) EXPOSURES ABOVE Rs.2 CRS AND UPTO Rs.5 CRS, RATED INTERNALLY UNDER
RAM MODEL & EXTERNALLY UNRATED ACCOUNTS WITH EXPOSURE MORE THAN
Rs.5 CRS (RATED INTERNALLY)
BOTH MANUFACTURING / SERVICES (Other than NBFCs, Commercial Real Estate,

Capital Market exposures)
(I) EXPOSURES ABOVE Rs.2 CRORE AND UPTO Rs.5 CRORE, RATED INTERNALLY
UNDER RAM MODEL
(II) EXTERNALLY UNRATED EXPOSURE ABOVE Rs.5 CRORE (RATED

INTERNALLY)
(RoI linked to value of immovable property (freehold) mortgaged / approved collaterals viz.,
Life Insurance Policies, NSCs, KVPs, PSU Bonds, as security either as prime or collateral or
in aggregate )
Revised Spread
% of Value of immovable property/approved
collaterals in proportion to the exposure
Rating Grade Upto 50% 51% - 76% - >100%
75% 100%
Normal Risk MCLR+2.90 MCLR+2.75 MCLR+2.55 MCLR+2.30
Moderate Risk MCLR+3.15 MCLR+3.00 MCLR+2.80 MCLR+2.55
High Risk 1 MCLR+4.90 MCLR+4.70 MCLR+4.50 MCLR+4.25
High Risk 2 & 3 MCLR+5.90 MCLR+5.70 MCLR+5.50 MCLR+5.25
*Exposure above Rs.5 Crore externally unrated, an additional interest of 0.25% pa

shall be charged till such time external rating is obtained by the entity.
additionally
Repayment Premium
D) EXPOSURES ABOVE Rs.5 CRS AND EXTERNALLY RATED (H.O CIR 185/2016,
532/2016)
BOTH MANUFACTURING / SERVICES (Other than NBFCs, Commercial Real Estate,

Capital Market exposures)
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Rating Grade ROI

AAA or Equivalent MCLR+1.80
AA or Equivalent MCLR+2.00
A or Equivalent MCLR+2.50
BBB or Equivalent MCLR+2.70
BB or Equivalent MCLR+3.50
B or Equivalent MCLR+4.70
C&D or Equivalent MCLR+6.00
additionally
Repayment Premium
E) OTHERS
Limit Upto 90 days Above 90 days upto 180

usance days
BE-MSME MCLR+0.50 MCLR+0.95
BULC-Constituent Borrower 3M MCLR +0.50 6M MCLR +0.95
BULC-Non Constituent Borrower 3M MCLR +1.45 6M MCLR +1.95
The rate of interest is subject to change as advised by the HO from time to time.
Concession in ROI for BULC:
Regional Head CAC/Circle Head – CAC, in respect of accounts up to their Delegated
Power, based on merits, rating and standing of the borrower can permit concession up to
145 bps on the normal applicable rate under the BULC scheme, subject to Minimum of
applicable MCLR, based on the tenor of the bill, on case to case basis. However, this
power is available to Regional Head CAC / Circle Head CAC till March 31, 2018 as
a special measure, other guidelines as per H.O Cir 543/2016.
F) MSME SCHEMES
SI.No. Schemes Working Term Loan Other condition

Capital /remarks
1. Canara Trade MCLR+2.55
2. Trader’s Loan
a) Upto Rs.2 lacs MCLR+4.30
b) Above Rs.2 lacs MCLR+5.55
3. Canara MSE Unnati MCLR+1.55 Applicable Concession for
liquidity CGMSE / Women
premium to entrepreneur can be
be loaded extended subject to
ultimate lending does
not fall below
respective MCLR
4. Canara MSE Smart Concession for
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CGMSE / Women
(i) Upto Rs.50 lacs entrepreneur can be
a) Low and Normal Risk MCLR+1.55 Applicable extended subject to
b) Moderate Risk MCLR+1.80 liquidity ultimate lending does
premium to not fall below
(ii) Above Rs.50 lacs be loaded respective MCLR
a) Low and Normal Risk MCLR+1.80
b) Moderate Risk MCLR+2.05
5. MSME Vahan MCLR+0.80 Concession for
CGMSE / Women
entrepreneur not to
be extended
6. MSE Vijeta – Model II Concession for
a) Low and Normal Risk MCLR+1.30 CGMSE to be
b) Moderate Risk MCLR+1.55 extended
7. MSME CAP Concession for
a) Low and Normal Risk MCLR+1.55 MCLR+1.80 Women entrepreneur
b) Moderate Risk MCLR+2.30 MCLR+2.30 not to be extended
(Applicable
liquidity
premium to
be loaded)
8. Rice Shellers Scheme Applicable Concession for
Security comfort liquidity CGMSE / Women
a) 100% and above MCLR+0.80 premium to entrepreneur can be
b) 75% and above MCLR+1.05 be loaded extended subject to
c) 50% and above MCLR+1.30 ultimate lending does
not fall below
respective MCLR
9. Canara Dal Mill Super Concession for
Security comfort CGMSE / Women
a) 100% and above MCLR+1.05 MCLR+1.55 entrepreneur can be
b) 75% and above MCLR+1.30 MCLR+1.80 extended subject to
(Applicable ultimate lending does
liquidity not fall below
premium to respective MCLR
be loaded)
10. Canara Contractor ROI applicable to MSME and concession as per HO
Scheme Cir.372/2014
11. Canara Caravan ROI applicable to MSME and concession as per HO
Cir.419/2014
12. Others ROI applicable to MSME segment
additionally
P a g e | 14
Repayment Premium
13.Doctor’s Choice (MSME SERVICES):
a) Term Loan
Low Risk Normal Risk Moderate Risk

Upto Rs.2 lacs MCLR+1.45 MCLR+1.45 MCLR+1.45
Above Rs.2 lacs upto Rs.5 crs MCLR+1.45 MCLR+1.95 MCLR+2.20
b) Working Capital
Low Risk Normal Risk Moderate Risk

Upto Rs.2 lacs MCLR+0.95 MCLR+0.95 MCLR+0.95
Above Rs.2 lacsupto Rs.5 crs MCLR+0.95 MCLR+1.70 MCLR+1.95
Concession for CGMSE / Women entrepreneur can be extended subject to ultimate lending
does not fall below respective MCLR
APPRAISAL OF TERM LOAN PROPOSALS
A. Term Loan
 is a single transaction loan repayable in installments along with interest.

 is provided for a specific purpose / project, where investment is fixed in nature
 is repayable in not less than 12 months.
 is granted for both industrial and non industrial purposes.
 is normally extended for acquisition of land, building, machinery and purchase of
vehicles, equipment and also in the form of risk capital assistance etc.
B. Documents to be obtained:
 Along with application, project report and projected balance sheets for the entire
repayment period are to be obtained in case of new units/ projects.
 No financial statements need be insisted upon from non-corporate priority sector
advances of aggregate limits up to Rs.25000/-, provided the borrower is not
otherwise bound by any statute / regulation.
 In all other cases, financial statements are to be insisted upon.
C. The following are the provisions regarding audit of financial statements

submitted:
P a g e | 15
 Audited financial statements need not be insisted in case of finance to non-corporate

borrowers (both existing and new), except in the case of such entities where
submission of Audited Financial Statements is mandatory as per statute, for
sanction / renewal / enhancement of aggregate credit limits upto Rs.20 lakhs. (FB
/NFB including TLs & DPGs). However in such cases, unaudited financial statements
are to be obtained.
 For aggregate credit limits of over Rs. 20 lakhs, audited financial statements are to
be obtained.
 Where the audit of account is mandatory by virtue of existing statute / law in force,
in such cases audited financial statements are to be obtained irrespective of the
amount of aggregate credit facilities.
 In case of corporate borrowers, audit of the accounts is mandatory and therefore
audited financial statements should be insisted irrespective of nature / quantum of
credit facilities.
 Financial statements are to be obtained for the preceding 3 years in case of existing
units.
 Financial statements submitted should not be more than 6 months old at the time of
submission of proposal for fresh limits as otherwise provisional financial statements
of the latest date are to be obtained.
 Projected cash flow & funds flow statements to be insisted covering the period of
repayment. For loans uptoRs. 5 lakhs, these need not be insisted upon, provided the
sanctioning authority is satisfied with the details furnished in NF 527 & 528/NF998.
D. Others:
 Proof of Identity of Proprietor, partner or Director

 Copy of PAN card (for generating CIBIL)
 Proof of Residence of Proprietor, partner or Director
 Proof of Business Address
 Profile of the Unit
 Rent agreement (If business premises is on rent)
 Project Report furnishes a complete report of the project right from the stage of
establishing to the stage of marketing the products. A copy of the project report is to
be obtained and studied.
 Form of Credit Monitoring Arrangement (CMA) in the prescribed format where
aggregate fund based working capital limit sought is Rs.1 Crore and above.
 Copies of all licenses / permits/Pollution control certificates in respect of establishing
the unit, import of machinery etc should be obtained.
 Particulars of the assets standing in the name of the borrower / guarantor (NF 589)
are to be obtained wherever applicable with clear details of the assets.
 Latest sales tax assessment orders of the unit and returns filed to be obtained.
 Income tax and wealth tax assessment orders of the unit and returns filed by the
proprietor / partners / directors and / or guarantors are to be obtained.
 For small borrowers under priority sector up to a limit of Rs.25000/- submission of
IT, WT, ST assessment orders need not be insisted upon. However, in respect of
sales tax, the following requirements are to be satisfied.
o The borrower should be registered as a dealer under the relevant sales tax laws.
o The borrower should be regularly paying tax dues as required under sales tax
laws.
o The borrower should furnish a copy of the sales tax registration certificate.
P a g e | 16
o The borrower to give a declaration regarding the sales tax paid by him in the
latest financial year.
 No due certificate from PF Commissioner to be obtained wherever required.
 Details of other statutory dues like Family Pension, Employees’ State Insurance etc.
if any have to be called for.
 Power sanction letters/Feasibility certificate from Electricity Board
E. Broad project parameters for considering term loan proposal:
While taking up the large projects, the project shall conform to the following broad financial
indicators:
Transport operators:
In case of loans for acquiring and operating Heavy Commercial vehicles / Light Commercial
Vehicles, an independent appraisal shall be carried out and repayment capacity will be
established with reference to satisfactory DSCR. Financial viability from the net revenues
from the vehicles proposed to be financed can be established.
Benchmark parameters in this regard are as under:
Parameters Benchmarks
DSCR Not less than 1.50
Debt/Equity ratio Not more than 3:1 and can be relaxed upto 4:1
Repayment Period Not exceeding 6 years excluding Moratorium period of
maximum 3 months.
Others:
Key parameters Other than Infrastructure Projects
Project Cost Upto Rs.100 Project Cost above Rs.100
Lakhs Lakhs
Debt/Equity Ratio Not more than 3:1. In Not more than 2:1. In
exceptional cases the exceptional cases sanctioning
sanctioning authority may authorities not less than DGM-
accept upto 4:1 duly CO-CAC (Circle Head)
justifying the reasons. canaccept upto 4: 1 duly
justifying the reasons.
Promoters contribution Minimum of 20% of project Minimum of 20% of project
cost. cost.
Fixed Assets Coverage Ratio Not less than 1.33. Not less than 1.33. In
Exceptions upto 1.20 exceptional cases
sanctioningauthorities not less
than DGM-CO-CAC (Circle
Head) canaccept upto 1.20
duly justifying the reasons.
Repayment period Upto 7 years excluding Upto 7 years & in exceptional
moratorium, but not to cases upto 10 years,
P a g e | 17
exceed an overall tenor of 10 excludingmoratorium, but not

years to exceed an overall tenor of
12 years
Overall Debt Service Not below 1.50 Not less than 1.50. In
Coverage Ratio(DSCR) exceptional cases
sanctioningauthorities not less
than DGM-CO-CAC (Circle
Head) canaccept upto 1.40
duly justifying the reasons.
Internal Rate of Return (IRR) Not Applicable At least 4% above estimated
(Post tax) (Applicable weighted average cost of funds
toproject cost of Rs.25.00
crore& above)
F. The following are to be studied/ carried out while appraising a term loan
project:
 Background of the promoter/s.

 Product choice & market survey.
 Industry profile.
 Government consents.
 Location
 Cost of project & means of finance, availability of margin for working capital.
 Details of machinery.
 Availability of raw materials, manpower, water, power, transport etc.
 Marketability of the proposed product/s.
 Managerial ability of the promoter/s.
 Break even analysis and sensitivity analysis.
 Such other indicators necessary for appraisal
ASSESSMENT OF WORKING CAPITAL
Methods of Assessment:
 Turnover Method
 MPBF System
 Cash Budget System
A. Turnover Method of Assessment of working Capital:
Method Applicability:
a) 25% of the projected and accepted annual
sales turnover value shall be computed as MSME –Mfg& WC (FB) upto
working capital requirement. Other Services Rs.5 crores.
b) Branches / offices to ensure maintenance of Other than WC (FB) upto
Minimum margin of 5% on the projected MSME Rs.2 crores.
annual sales turnover accepted by the bank Traders, WC (FB) upto
which should be equal to 20% of (a) above. Merchants, Rs.2 Crores
c) Working Capital limit to be computed at 20% Exporters,
of the projected gross sales turnover accepted others etc.who
P a g e | 18
by the Bank. are not having

d) Bank to provide atleast 4/5th (i.e., 20%) as a pre-
working capital facility and the borrower to determined
bring in 1/5th (5%) as margin. manufacturing /
e) If the NWC available in the system is more, the trading cycle
same shall be reckoned for while assessing the
extent of bank finance and lower limit can be
considered.
B. Modified WC Assessment for MSEs upto Rs.5.00 Cr – Opting for Digital

Transaction: (HO Cir 395/2017)
 For MSE, additional 5% working capital limit increased i.e. 30% of the portion of the
assessed projected turnover of the entity expected to be carried out through digital
mode for MSEs with FB working capital limits up to Rs. 5 Crore. Margin would be 3.33 %
of projected accepted turnover.
 New parties who have just started their business shall be provided selectively by
reckoning 25% of the projected sales accepted by the Bank for the current financial year
under digital mode.
 The extent of Digital transaction shall be monitored on Month –on-Month basis and any
excess finance on account of lack / absence / shortfall of such transactions shall result in
pro-rata reduction in additional limit assessed based on digital transaction.
 In case the Working Capital limit has been assessed as per the Modified Methodology
stated herein, the Adhoc Limit shall be sanctioned only after due assessment of the need
and based on the specific requirement of the entity.
 All proposals for sanction of Adhoc facility (other than Temporary over Limit) shall be
placed to next higher authority. The aggregate limit to the borrower with Adhoc facility
shall not exceed 35% of the projected turnover
Example:
(Rs in lakhs)
Sl. No Particulars Digital Mode Non Digital Total
Mode
50 % 50 %
1 Projected Sales 50 50 100
2 Working Capital Cycle 120 Days 120 Days 120 Days
3 No of Cycle 3 3 3
4 Turnover to be financed 16.67 16.67 33.33
33.33 % of (1)
5 Margin 1.67 4.17 5.84
Digital – 3.33 % of (1)
Non Digtal – 8.33 % of (1)
6 Eligible Bank Finance 15.00 12.50 27.50
(4) – (5)
7 Current Ratio 1.11 1.33 1.21
P a g e | 19
 As per the above, for the estimated turnover of Rs.100 lakhs, the firm is eligible for
Rs.27.50 lakhs under modified method subject to 50 % of the transactions are routed
through digital mode.
 At the time of the renewal of the facility, the assessment shall be carried under the
revised method up to 31.03.2018 or until further instructions.
B. MPBF System of Assessment of Working Capital:
a) Uniform classification of current assets
and current liabilities shall be adopted on MSME –Mfg& WC (FB) above
the lines given in the CMA data format. Other Services Rs.5 crores up
b) Assessment of credit requirement of a to Rs.25
party shall be made based on the total Crores.
study of the borrower’s business Other than WC (FB) above
operation vis-à-vis the production / MSME Rs.2 crores up
processing cycle of the industry which to Rs.25
shall represent a reasonable buildup of Crores.
current assets for being supported by Limits over Rs. 25 Cr can be
bank finance. assessed on the basis of
c) RBI has allowed freedom to Banks to MPBF system or cash budget
decide the holding levels of various system at the option of the
components of current assets for borrower.
financial support to ensure efficient
functioning of the unit.
d) For norms related to level of inventory,
margin etc., please refer to Manual of
Instructions on Working Capital Finance
updated till 30.06.2005.
C. Cash Budget System of Assessment of Working Capital:
Working capital needs of a. Borrowers seeking / enjoying credit facilities of
the borrower are assessed over Rs. 25 crores can be assessed on the basis of
on the basis of projected Cash Budget system or MPBF system at their
cash flow statements. option.
Assessment of working b. In case of specific industries / seasonal activities
capital by grouping the such as software export, construction activity, tea,
cash flows under three sugar, normally, this system may be adopted.
heads viz., Operating, c. In the case of specific industries like tea, wherever
Investing and Financing. for specific reasons, the borrower opts to avail the
Assessment is done by Working Capital facility under MPBF system, the
P a g e | 20
arriving at the deficit same may be permitted by the respective

between cash inflow and sanctioning authority.
cash outflow during a
period of time.
IMPORTANT SCHEMES AVAILABLE FOR MICRO, SMALL & MEDIUM ENTERPRISES

(MSMEs)
OPEN CASH CREDIT (OCC)
Purpose For working capital needs of MSME units.

Eligibility Individuals, Proprietorship, Partnership, Ltd. Companies etc.
Assessment of Depending on the working capital requirement of the unit assessed as per
limit turnover method/MPBF System/Cash Budget System.
Drawings from the account shall be against Drawing limit arrived based on
stocks viz, raw materials, work-in-process, finished goods and receivables.
Wherever required, Overdraft against Book debts (ODBD) is also permitted
against book debt of specific age arising out of genuine trade transactions
with Govt./Public Sector Undertakings/Joint Stock Companies/firms of
repute.
Security Prime security - Stocks, receivables.
Collateral security - Land and building, plant and machinery plus Personal
guarantee to be obtained wherever required. Stock Inspection Monthly.
Repayment / Normally the duration of OCC limits will not exceed 12 months from the
Tenability date of sanction.The policy of the Bank prescribes discriminatory time
schedules for fixing tenability of WC limits (standard assets) based on
rating of the borrowers.
SN Risk rating Grade MaximumPeriod
1 Low risk – Grade I& II 24 months
2 Low Risk – Grade III 15 months
3 Normal risk – Grade IV 12 months
4 Moderate risk – Grade V 12 months
5 High Risk-Grade VI & above 12 months
Guarantee Cover under Credit Guarantee Scheme for Micro & Small Enterprises
cover (CGMSE) is available, subject to conditions.
Others
 Audited Balance Sheet to be obtained for corporate irrespective of
the loan amount. For others, Limit above Rs 20 lacs or Turnover of Rs
100 lacs and above per annum, where total receipts exceeds Rs 50
lacs and also where audit of balance sheet is mandatory by statute.

MSOD cum Stock Statement (NF902) details shall be obtained
Monthly from Industrial borrowers enjoying working capital limits of
P a g e | 21
Rs 10 lac and above.(322/2011)


Branches shall obtain the Simplified stock statement (NF 1003)
from all borrowers (industrial and non industrial borrowers) who are
enjoying SOCC limits upto Rs 5 lacs and OCC/PC limits upto Rs 10
lacs. In NF1003, godown inspection report is embedded hence
separate NF814 is not required.(322/2011)

Treatment of unpaid stock : Normally, drawing limit shall be
computed by deduction entire trade creditors from stock value to
determine drawing limit. As a special case, with the permission of
GM(HO) and above authorities trade creditors may not be deducted
from stocks, upto accepted level for arriving drawing power

In case of SME working capital limits upto Rs 2 crores for LR1, LR2
parties obtention of detailed stock statements and godown inspection
may be prescribed at quarterly intervals

QOS / HOS Operational Guidelines : Applicability: Parties enjoying
Fund & Non-Fund based working capital limits of Rs 5 crore and
above. penal interest of 1% for delayed/non-submission of QOS/ HOS
from borrowers, to be collected for the entire quarter. Penal interest
of 0.25% on NFB liability subject to a cap of Rs 1 Lakh per month for
Parties who enjoy exclusive NFB. Where Party is enjoying and NFB
limit, penalty shall be 1% on FB liability and 0.25% on NFB as above
shall be charged
 Periodicity of submission: QOS within 6 weeks from the closure of

the relevant quarter (14th May / August / November / February) and
HOS within 8 weeks from the closure of the half year (31st May and
30th November)
OD-MSME (MANUFACURING)
Purpose To provide hassle-free working capital assistance (fund based) in the form
of running limit to the existing and prospective Micro, Small & Medium
Manufacturing (Manufacturing) units.
1. MSME (Manufacturing) engaged in industrial activity and falling within
the meaning of Micro, Small & Medium Enterprises as defined in MSMED
Eligibility Act, 2006.
a. Existing clients whose dealing with the Bank is satisfactory in the

preceding 2 years and whose borrowal accounts are rated as under:
i. For advances upto Rs.2 lacs: Asset Sub classification Code-Standard
1/Standard 2 (ASCC-S1/S2)
ii. For advances above Rs.2 lacs: Risk Grades III (Low Risk), IV (Normal
Risk), V (Moderate Risk)
b. New clients/units whose market report and prospects are satisfactory
subject to their dealings confined to our Bank.
Quantum of Maximum limit permissible under the scheme is Rs.3 crores.
Finance A suitable Sub Limit for Inland Letter of Credit (ILC) and/or Bank
Guarantee (BG) may be fixed within the overall OD-MSME limit depending
on the need, by the sanctioning authority.
Margin Stocks and Book Debts – NIL
Security Hypothecation of stocks and/or book debts acceptable to the Bank whose
value as per the stock/book debt statement is to the extent of the liability
P a g e | 22
outstanding. The book debts should be arising out of genuine trade

transactions and not older than 90 days.
Mortgage of immovable property either prime or collateral (land and
building -factory/business/residential building) whose value shall not be
less than 125% of the limit.
Vacant sites with no superstructure thereupon may also be taken as
security for the above purpose provided they are allotted by Govt.
approved local bodies/ competent authority and converted for non
agricultural purpose by the competent authority. However, the valuation of
the same to be in relation to Guideline Value as advised by the competent
authority in respective States from time to time.
Tenability For limits upto Rs.2 lacs (ASCC- 2 years
S1/S2)
For limits above Rs.2 lacs with Low Risk: 18 months
Risk Grades Normal Risk: 15 months
Moderate Risk: 12 months
Annual review of accounts to be conducted to step up/step down the limits.
The tenability as above may be permitted by the respective sanctioning
authority specified under the scheme.
Stock Upto 10 lakh- Half Yearly, Beyond 10 lakh-quarterly
inspection
Guarantee Eligible collateral free advances shall be covered under CGMSE as per
Cover prevailing guidelines.
Scheme 81500
Code
Ho Cir 215/2012, 421/2013
SIMPLIFIED OPEN CASH CREDIT (SOCC)
Purpose For working capital needs of Small MSE units.

Quantum of Upto Rs.5 lakhs.
Finance
Security Prime security - Assets created out of the credit facility
Repayment Facility is permitted as a Running Limit subject to review/ renewal
every year.
Guarantee cover CGMSE cover is available, subject to conditions.
Cir Nos 322/2011
LAGHU UDYAMI CREDIT CARD SCHEME (LUCC)
Purpose To meet the working capital requirement of artisans, village industries,

micro and small enterprises including tiny units.
Eligibility All existing small borrowers of above category enjoying aggregate loan
and/or operative limits of Rs.10 lakhs are eligible. Total aggregate limit
including proposed card limit should not exceed Rs.10 lakhs.
P a g e | 23
Borrowers should have satisfactory dealings with us for the last 3 years.
Borrowers with continuous satisfactory past dealings for a minimum period
of 3 years but not having any liability can also be issued the card
Quantum of Maximum up to Rs.10 lakhs per borrower (aggregate).
loan Assessment of credit card limit in respect of Micro and Small Enterprises
including tiny units shall be as per Turnover Method.
Margin For limits upto Rs.25,000/- : Nil
For limits above Rs.25,000/- : 15 to 25%
Security Assets created out of the finance are to be hypothecated to the Bank.
No collateral security is insisted for credit facilities up to Rs.10 lakhs.
Guarantee All accounts are mandatorily to be covered under Credit Guarantee Scheme
cover for Micro & Small Enterprises (CGMSE) is available, subject to conditions.
Validity 3 years. Renewal of working capital limit is subject to annual review.
Cir Nos 46/02, 144/04, 104/06
CANARA MSE UNNATI
Purpose To meet business related needs including purchase/ construction of

business premises, machinery, equipment, vehicles and working capital
requirements of Micro and Small Enterprises whose credit requirement is
above Rs.10 lakhs and upto Rs.100 lakhs.
Eligibility 1. Existing customers with satisfactory track record for last 2 years (both
conduct of account with financing branch and financials of the applicant
unit)
2. New customers subject to satisfactory OPL from their existing bankers
3. New units subject to satisfactory market opinion on the promoters and
prospects of the project/business proposed
4. Individuals, proprietorship, partnership concerns, private limited
company, trusts, HUF are eligible.
a. Partnership concerns with HUF as one of the partners, Educational
institutions, Self Help Groups, Joint Liability Groups and units
engaged in Retail Trade activity are not eligible.
b. Units whose Risk rating is above moderate are not eligible.
Scoring norm is not to be considered for eligibility criteria.
Type of Term loan and/or Working capital and non-fund based limits
credit facility
Margin 20% / Book debts – 25%
Maximum 1. Term loan: As per scheme guidelines
loan 2. Working capital: As per Turnover Method
3. Maximum finance: Rs.100 lakhs
Rate of Linked to MCLR and floating
interest 0.50% interest concession is available for women entrepreneurs
0.25% interest concession is available for CGTMSE covered accounts
Upfront fee / 75% of the normal charges
Processing
charges
Repayment
Term loan Repayable in maximum of 7 years in monthly
P a g e | 24
Installments inclusive of holiday period of 6 months

Short term Repayable in maximum of 35 months in monthly
loan Installments. Repayment holiday: Maximum of 2 months.
Working Working capital (OCC/SOCC/ODBD/OD): Tenability

capital Up to 2 years subject to Annual Review of accounts.
Guarantee Coverage under Credit Guarantee Fund Scheme for Micro and Small
cover Enterprises is mandatory.
Scheme 65500
code
Ho Cirs 381/2013,384/2013,425/2013,636/2013
CANARA MSME CAP (CREDIT AGAINST PROPERTY)
Purpose To provide credit for business requirement of MSME borrowers against the
security of unencumbered Land and Building belonging to the unit or
promoters of the unit or close relatives of the promoters.
Eligibility Loan against mortgage of Land and Building (Land alone will not be
considered) located in Metro and Urban centres for Individuals/Partnership
firm (other than partnership firms where HUF is a partner)/ company
(excluding NBFC)/Traders/ Businessmen/professionals or self-employed
persons/proprietary firms
Type of Working Capital (Secured OD) and Term Loan
credit facility
Maximum 1. Manufacturing Units : Rs.10 Crores.
loan 2. Service Units : Rs.5 Crores.
Subject to the Minimum loan amount of Rs.10 lakhs.
Margin 20 % for Term Loan, Working Capital & NFB limits.
Rate of Working Capital Term Loan

interest Low and 1 Yr MCLR + 1.55 1 Yr MCLR +
Normal Risk 1.80
Moderate Risk 1 Yr MCLR + 2.30 I Yr MCLR +
2.30
Applicable Liquidity premium is to be loaded in case of loans
repayable above 1 year.
0.50% concession to Women entrepreneurs NOT to be extended
under this scheme.
Repayment Working Capital : Tenable for One Year
Term Loan: 5 to 10 years inclusive of repayment holiday
Security 1. Mortgage of immovable properties in the form of Primary, Collateral or
Primary and Collateral put together
2. The Value of Property should be
Area at Manufacturing Services
Urban & Metro 100 % 125 %
P a g e | 25
Semi Urban 125 % 150 %
3. Agricultural Property is prohibited. Agricultural Properties should not be

taken as security under this scheme.
4. Vacant land shall not be accepted as security.
5. Tenanted Properties shall be avoided. Can be accepted by the next
higher authority.
6. In addition to personal guarantee of Proprietor/Partner/Directors,
Personal guarantee of property owners to be obtained.
7. Two Valuation report to be obtained.
8. In respect of Properties which are already under mortgage with the
bank residual value has to be taken.
9. In respect of properties which are less than one year old, valuation of
the property shall be taken as “sale deed value” or “guideline value”
whichever is less. This condition shall be complied without any
exception.
10. Not eligible to be covered under CGTMSE
Stock Quarterly
Statement /
Stock &
Security
Inspection
Stock Audit Low and Normal Risk accounts Waived Upto Rs.5.00 Crores, Beyond Rs. 5
Crs – as per extant guidelines and for Moderate Risk accounts – Every Year.
Upfront Fee 50 % of the applicable Charges.
/ Processing
Charges
Scheme 65560
Code
Ho Cirs 301/2014, 551/2015, 131/2017
CANARA CONTRACTOR SCHEME
Purpose Fund Based and Non fund based Working capital assistance ( SOD )
and Term Loan for purchase of brand new equipment /office premises
to MSME service units engaged in contractors /sub-contractors activity
Eligibility Civil,mining and construction contractors / sub-contractors. ASCC
–S1/ S2 for advances uptoRs 2 lacs. For advances above Rs 2 lacs –
LR/NR/MR
Quantum Above Rs. 10 Lakhs up to a Maximum of Rs.10 crores.
Maximum 9 times of TNW or need based finance whichever is
lower/cash flow projected permitted.
Maximum Term Loan Rs 5 crores.
For Loans above Rs 2 Crores, valuation by two independent valuers to
be taken.
Rate of Interest Concession in ROI ranging from 0.50% p.a. to 0.75% p.a. from the
applicable rate is extended depending upon the scoring as per the
matrix devised for this scheme as per H.O Cir 372/2014.
P a g e | 26
Margin SOD: No Stock Statement submission and computation of Drawing

power. Backed by Collateral value of 125%.
TL & NFB :10%.
Repayment For WC: Tenability 12 Months.
For Term Loan: Maximum of 7 years.
Processing Chg/ 25% concession in the applicable charges.
Up front fee/
Security- Prime Secured OD: Backed by Collateral Security of Immovable property

Term Loan: Assets created out of Bank Finance.
Collateral Mortgage of immovable property by way of land and building
Security (business/residential building) situated in Semi-Urban/Urban/Metro
Centres whose value shall not be less than 125% of the limit.
 Vacant sites with no superstructure thereupon may also be taken

as security for the above purpose provided they are allotted by
Govt. approved local bodies/competent authority and converted for
non agricultural purpose by the competent authority. However, the
valuation of the same to be in relation to Guideline Value as
advised by the competent authority in respective States from time
to time.
 The immovable property/ies may be in the name of the borrowing
unit, proprietor, partner(s), director(s) of the private limited
company or their close relatives as defined in Cir 432/2010 dt.
31.12.2010 (DOP Booklet) provided their personal guarantee is
available.
 Property mortgaged for other loans standing in the name of the
borrowing unit may also be taken as security for the CANARA
CONTRACTOR SCHEME limit subject to ensuring that the residual
value of such property is 125% of the CANARA CONTRACTOR
SCHEME limit.
 Similarly, property mortgaged for CANARA CONTRACTOR SCHEME
limit may also be taken as security for limits permitted to the same
borrower under other schemes of the Bank, if there is any residual
value (after ensuring availability of 125% security coverage for the
CANARA CONTRACTOR SCHEME limit).
 Following types of immovable property/ies are not eligible to be
taken as security:
 Agriculture land and those prohibited by statutory authorities.
 Immovable property/ies standing in the name of HUF who are
 proprietor/partner(s) in the borrowing unit.
 Third party property (other than those mentioned in (b) above
 including those in the name of Trusts.
 Properties in the name of the directors and their close relatives in
 the case the borrower is a Public Limited Company. (However,
 property belonging to the promoter/whole time director who is
 associated with the day to day affairs of the company may be
 accepted).
 Properties which are tenanted
Inspection Half Yearly
P a g e | 27
Drawing Power As the entire working capital facility is in the nature of Secured
overdraft facility, Stock statement need not be submitted and no
Drawing Power need be computed for the facility
Others Classification, Delegation of Powers, Risk Rating, KYC, Project
Appraisal, Credit Risk Rating, LSR, Valuation, Insurance, Inspection,
end use and other guidelines as per extant guidelines. All other
applicable guidelines as applicable to nature of advance to be adhered
to
Ho Circular 372/2014, 386/2014
CANARA TRADE
Purpose For working capital in the form of secured OD and term loan
Target Traders, business enterprises, commission agents, services sector,
Group professionals and selfemployed.
Eligibility 1. Existing and new clients whose track record is good
2. Units whose borrowal accounts are proposed to be taken over from
other banks subject to complying with takeover norms of the Bank.
Quantum Maximum limit: Rs.10 crores (fund based or non fund based or both)
Security a. Hypothecation: Stocks and/or book debts (not more than 90 days)
acceptable to the bank
b. Mortgage of immovable property whose value is not less than:
i. 100% of the limit in case of secured OD limits upto Rs.10 lakhs.
ii. 133% of the limit in case of secured OD limits of over Rs.10 lakhs
and exclusive term loans.
iii. 133% of the combined limit where secured OD limit and term loan
are permitted.
iv. 200% of the limit in case of commission agents.
c. Personal guarantee of partners, promoter directors and owner of the
immovable property.
d. Immovable property in the name of the borrowing unit, proprietor,
partner (s), and director(s) of the private limited company are accepted.
e. Agriculture land, tenanted premises (other than those to PSUs, PSBs,
MNCs), properties prohibited by statutory authority are not acceptable.
Margin 25% margin in case of term loans.
10% margin on stock and book debts in case of Secured OD of over Rs.50
lakhs.
Assessment Upto Rs. 2 crores – Turnover Method, Rs.2 to 10 crores – MPBF Method
Rate of Rate of interest as per prevailing guidelines of the Bank linked to MCLR of
interest the Bank, subject to changes from time to time.
Validity/ Working Capital - Secured OD: 2 years subject to annual review
Repayment Term Loan -Within 84 months including repayment holiday
P a g e | 28
Others  Submission of stock and book debt statements – once in 6 months upto
Rs.50 lakhs & Once in 3 Months for above Rs.50.00 lakhs.
 Unit Inspection by Once in 3 Months.
 Wherever the project cost includes construction also, the term loan
component for construction activity should not exceed 60% of the
project cost. (cir 365/09).
 For Commission Agents, EMT of land and building whose value shall not
be less than 200% is taken as security to the loan as no stocks are
available in this kind of trade and the only security comfort available is
by way of EMT of property/ies.
 Revaluation of Land & Building for the purpose of enhancement should

not be entertained subject to relaxation permitted as per HO Cir
332/2013.
 Value of the property based on the latest valuation report may be

reckoned at the time of renewal of limits with the prior clearance of the
authorities, subject to minimum gap of three years from the date of
original sanction.
 Appreciation permitted to the extent of 25%- by respective sanctioning

authority, subject to maintenance of 133% margin. Appreciation of
value of the property is based on TWO valuations reports and for the
purpose of enhancement in the limit the value of the property which is
LOWER among the above TWO valuation reports to be taken into
account.
 Risk Rating of account should be upto Normal as per credit risk rating
based on the latest audited balance sheet.
 Property mortgaged to existing credit facilities can be accepted as

security for Canara trade loan of the same borrower provided the
security covers required margin for both loans.
Ho cirs 357/2005,307/2006,365/2009,39/2011,102/2011,332/2013
CANARA MSE VIJETA – MODEL II

Purpose To meet business related needs including purchase/ construction of
business premises, machinery, equipments, vehicles and working capital
requirements of WOMEN under Micro and Small Enterprises including
Retail Traders
Eligibility Individuals, Proprietorship concern, Partnership firm, LLP, Corporate
bodies (In case of Partnership Firm, the majority of partners should be
women and incase of Companies the management should be controlled by
the Women).
Type of credit Term loan and/or Working capital by way of Overdraft facility
facility
Maximum Above Rs.10 lakhs and up to Rs.2.00 crores
loan
P a g e | 29
Margin 20%
Rate of Low Risk and Normal Risk – MCLR+1.30
interest Moderate Risk – MCLR+1.55%
Applicable Liquidity premium is to be loaded in case of loans repayable
above 1 year.
0.25 % Concession to be extended for CGTMSE covered accounts.
Repayment TL: Maximum 84 months including suitable moratorium
WC: Validity 2 years subject to annual review
Processing 75% of applicable charges
Charges /
Upfront fee
Inspection Waived
Charges
Stock Simplified stock /book debt statement once in 6 months and detailed once
Statement / in a year
Inspection Inspection Half yearly
Security Prime: Hypothecation of assets created out of Bank finance
Collateral:
Upto Rs. 2.00 crore, cover under CGTMSE at the option of the borrower,
else EMT of property to the extent of 60% of the loan amount.
(For Traders, suitable collateral to the extent of 60% of the loan amount
to be obtained).
Scheme Code 65590
HO Nos 298/2014, 542/2017
CANARA MSME VAHAN
Purpose To purchase of brand new two wheelers and passenger cars , vans,
jeeps as business assets / business purpose .Goods carriers are not
eligible .
Eligibility MSME customers including retail traders( upto moderate risk
accounts )
Type of credit Term Loan
Maximum loan 90% on road cost or 3 years average net profit whichever is lower
subject to maximum Rs 25 lacs. Circle Head can permit above Rs 25
Lacs .
Rate of interest MCLR + 0.80 %
0.25% concession to CGTMSE covered accounts and 0.50%
concession for women entrepreneurs are NOT available under the
scheme.
Repayment Two Wheelers -60 EMIs. Four Wheelers -84 EMIs
Security Loans uptoRs 10 lacs CGTMSE cover. Loans above Rs 10 lakhs ,if not
covered under CGTMSE 100 % collateral security to be obtained
Scheme Code 65570
Ho Cirs 296/2014
P a g e | 30
CANARA CARAVAN
Purpose To finance new vehicles (Small, Light, Medium, Heavy Commercial

Vehicles, Passenger vehicle) Eg Trucks/Tankers/Trailers
/Tippers/Buses/Luxury Busses and passenger vehicles etc.
Eligible  Individuals /Firms /Companies /Trusts/ Institutions /Associations
Customers  Existing transport operators (Goods or passenger) having experience of
3 years or more in the line of transport operator business.
 Requirement of minimum 5 new vehicles or minimum loan amount of
Rs.25.00 lakhs.
 Transport operators holding national/state route permit and other
necessary permits/license/approvals
 Satisfactory track record with existing banks/FIs
 Income tax assesse (Personal & Business)
Loan Amount Minimum Rs.25.00 lakhs Maximum Rs.5.00 crore
Drawals against aggregate limit sanctioned for purchasing vehicles can be
permitted up to 6 months from the date of sanction, beyond which
unutilized limit would lapse automatically.
Margin Margins are linked to the scores under scoring model as per Annexure II of
H.O. Cir 419/2014.
Scores between 40% to Scores above

75% 75%
For cost of chassis 10% 5%
For cost of body 45% 40%
For fully built model 15% 10%
Insurance + registration Minimum 50% Minimum 50%
Rate of ROI applicable to MSME and concession as per HO Cir.419/2014
interest
Repayment Maximum 60 months (Inclusive of Holiday Period)
Prime Hypothecation of vehicles financed by Bank
Security
Collateral 1. Up to Rs.1.00 crore :
security Min 25% collateral security by way of land and building
or CGTMSE cover.
2. Above Rs.1.00 crore :

Min 25% collateral security by way of land and building.
Other 1. Takeover cases not allowed

conditions 2. The borrower(s) should hold the necessary driving license or
engage drivers possessing valid license to operate the type of
vehicle for which credit is sought.
3. Wherever applicable, borrower should provide a letter of authority
from its clients /Govt Departments etc authorizing the bank to
receive payment directly from them. Or escrow mechanism is to be
put in place.
Scheme Code 70860
Ho Circular 419/2014
CANARA MSE SMART
P a g e | 31
Target Professionals like Architects, Civil Engineers, Chartered Accountants, Cost

Group accountants and Company Secretary
Purpose To provide credit to MSE professionals for
purchase/construction of office premises /acquisition of
machineries /equipment/furniture/ fixtures, including
expansion and modernization of the existing unit, and need
based working capital limits (secured OD).
Eligibility 18-60 years individuals /proprietorship /partnership concerns
/Private limited company /HUF having 2 years’ experience. Applicable for
accounts rated upto Moderate Risk only
Type of Term loan and/or Working capital and non-fund based limits
credit
facility
Margin 10%, Working Capital - Nil
Maximum Urban & Metro – Rs 200 lacs (Max).
loan Other centers – Rs 50 Lacs (Max).
Furnishing of office premises / Equipment purchase – 20 % of
eligible quantum (Max 20 Lacs).
Construction activity – Max 80 % of eligible quantum.
WC–Max 5 Lacs. Furnishing leased premise is not permitted.
Assessment 75 % of total project cost or 5/10 times of net annual income for
loans below / above Rs 10 lacs respectively ( whichever is less ) Working
capital -10 % of previous year receipt.
Rate of
interest Loan Amtupto Rs.50 Lakhs Above 50 Lakhs
Low and MCLR + 1.55 MCLR + 1.80
Normal
Risk
Moderate MCLR + 1.80 MCLR + 2.05
Risk
0.50% interest concession is available for women entrepreneurs

0.25% interest concession is available for CGTMSE covered accounts
Repayment WC – 3 Years, TL – 5-10 Years.
Guarantee Coverage under Credit Guarantee Fund Scheme for Micro and Small
cover Enterprises is mandatory.
Scheme 65580
Code
Ho Cirs 295/2014
P a g e | 32
CANARA MSME EXPO
Purpose Term loan scheme for MSME exporters, travelling abroad for business
purpose, participation in trade fairs ,exhibition abroad or international
Trade fairing India or any other sale promotion activities.
Eligibility Satisfactory track record for past three years , upto moderate risk
rated and minimum export turnover Rs. 100 Lacs during immediate
preceding year
Type of credit Term Loan
Maximum loan Linked to export turnover / Maximum Rs.25 Lakh per fair /exhibition
 Turnover Rs 100 Lakh and upto Rs 200 lakh – Limit upto Rs 10
lakh
 Turnover above Rs 200 Lakh and upto Rs 500 Lakh – Limit upto Rs
20 lakh
 Turnover Rs 500 Lakh and upto Rs 1000 Lakh – Limit upto Rs 30
Lakh
 Turnover above Rs 1000 Lakh – Upto Rs 50 Lakh
Margin 15-25 % of project cost
Rate of interest As applicable to TL under MSME.
0.50 % concession to women beneficiaries and 0.25 % concession to
CGMSE covered accounts
Repayment Max – 3 Years with initial repayment holiday of 3 months
Security Loans uptoRs 10 lacs CGTMSE cover. Loans above Rs 10 lakhs ,if not
covered under CGTMSE 100 % collateral security to be obtained
Conditions Min DSCR 1.5
Current Ratio : above 1 (after availing loan)
Ho Cirs 418/2014
CANARA DAL MILL SUPER
Purpose To meet the working capital AND term loan requirement of Dal processing
units in Micro, Small & Medium Enterprises (Manufacturing) sector.
Eligibility Both existing and new Dal processing units
Quantum of Minimum – Rs.10 lakhs - Maximum up to Rs.10 Crores per borrower
loan
Margin For limits upto Rs.25,000/- : Nil
For limits above Rs.25,000/- : 15 to 25%
Security Assets created out of the finance are to be hypothecated to the Bank.
Minimum Value of the Collateral Security by way of mortgage of immovable
Property in the form of land/building should be 75% of the loan amount.
Guarantee CGTMSE cover is available.
cover 0.50 % in the applicable rate to women MSMEs & 0.25 % on loans covered
under CGMSE
Validity 1 years. Renewal of working capital limit is subject to annual review.
Cir Nos 481/2014
MSME SAHAY - Working Capital Demand Loan(WCDL) facility to fund Input Tax
Credit claims related to GST
Purpose To provide credit against Input Tax Credit Claims related to GST to fund
P a g e | 33
the liquidity gap in working capital requirements.

Target Group Micro Small and Medium Enterprises (Manufacturing/Service) (Excluding
Educational institutions, Self Help Group, Joint Liability Group).
Eligibility a) The Scheme shall be applicable for accounts risk rated up to Moderate
Risk/BB only.
b)Conditions to be satisfied by the registered taxable person for obtaining
Input Tax Credits as per HO.Cir.310/2017, dt.23.06.2017:
 Party is in possession of Tax Invoice or Debit Note or such other tax

paid documents as may be prescribed;
 Party has received the goods or services or both;
 The supplier has actually paid the tax charged in respect of the supply,
to the government, and
 Party has furnished the return under section 39.
 Party has to submit the Certificate from Chartered Accountant (who
certifies the books of account of the party in the normal course of
business) certifying the above in seriatim to avail the facility of “MSME
SAHAY”.
Type of credit Single Transaction Loan, i.e. WCDL(Working Capital Demand Loan)
facility
Maximum 20% of the existing FB Working Capital limit Or
loan 80% of Input Tax Credit Claims, whichever is lower.
The above limit is over and above MPBF.
Rate of Low / Normal Risk: Applicable MCLR + 1.65%
interest Moderate Risk: Applicable MCLR + 1.85%
 No other ROI concessions under any category.
 In case of Unrated accounts with the exposure above Rs.5.00 crores,
additional interest of 0.25% shall be charged till such time External
Rating is obtained by the Entity.
Repayment Tenability till 31.03.2018 and shall be closed on or before 31.03.2018
Security Hypothecation of stock and receivables.

Entire working capital limit including the limit under ‘MSME SAHAY’ shall
be within the Drawing Power arrived at regular intervals for allowing
drawings in running limits
Delegation of CM/DM and above authorities are empowered to sanction such loans upto
Powers their delegated powers as applicable to Adhoc limits.
b) Branches, which are not headed by CM/DM above authorities have to
submit the proposals to the next higher authority
Others  If any Adhoc facility is existing in the name of the party, it is to be
cleared before availing “MSME SAHAY”.
 This facility will be beyond the number of Adhoc facilities, a borrower is
eligible during a particular year.
 All other guidelines as applicable to Adhoc limits shall be adhered to
Product Code 753
HO Nos 584/2017
P a g e | 34
BILLS UNDER LCs (BULC)
Purpose To facilitate discounting of high value bills co-accepted/ backed by LCs of

SBI and its subsidiaries, nationalized banks, foreign prime banks
operating in India and select private sector banks, Co-operative Banks
and LCs of our bank.
Eligibility Bills under LC advised through „Structured Financial Messaging System‟
(SFMS) shall only be negotiated.
(a) constituent borrowers (corporates/non-corporates) with satisfactory
performance. The account shall be under Low/Normal Risk / Moderate
Risk and/or having external rating grade upto BB. Wherever both internal
and external ratings are available, only external rating shall be taken into
account.
(b) Non-constituent borrowers (corporates/non-corporates) subject to the
condition that the bills drawn under LC are restricted to our Bank. The
proceeds shall invariably be remitted to working capital banker of the
beneficiary. However, the restriction on negotiating bills under
unrestricted LCs to non-constituents shall continue. In this regard,
Branches /Circles shall strictly comply with the extant Know Your
Customer / Anti Money Laundering guidelines of the bank issued from
time to time .
The bills should have arisen out of genuine sale transaction.
The limit sanctioned under the scheme should be on the basis of the
working capital requirement of the borrower. Negotiation of Bills under LC
over and above the assessed MPBF may be permitted by the respective
sanctioning authorities subject to tolerance of 10% of MPBF. Bills
discounted/negotiated under LC to be deducted from Debtors for
calculation of Drawing Power (DP).
Maximum The minimum amount of each bill under this scheme shall not be less
loan than 5 lacs.
The per party bills limit shall be upto 25 crore.
Bills beyond 25 crore per party prior permission from CGM-HO-CAC shall
be obtained.
Rate of
interest Constituent Non-Constituent
Borrowers Borrowers
Upto 90 Days 3M MCLR +0.50 3M MCLR +1.45
Above 90 Days up 6M MCLR +0.95 6M MCLR +1.95
to 180 Days
The rate of interest is subject to change as advised by the HO
from time to time.
Concession in ROI for BULC:

Regional Head CAC/Circle Head – CAC, in respect of accounts up
to their Delegated Power, based on merits, rating and standing of
P a g e | 35
the borrower can permit concession up to 145 bps on the normal

applicable rate under the BULC scheme, subject to Minimum of
applicable MCLR, based on the tenor of the bill, on case to case
basis. However, this power is available to Regional Head CAC /
Circle Head CAC till March 31, 2018 as a special measure,
other guidelines as per H.O Cir 543/2016.
Repayment The bills with shorter maturities may be encouraged under the subject
scheme and in any case, the usance period of bills should not exceed 180
days
Sanctioning I. Negotiation of inland bills drawn under LCs established by our
Authority branches:
Designated Branches^ may negotiate bills (both DP & DA) drawn

under LCs established by our branches to full extent and upto
twice the normal delegated power for secured facility i.e.,
additional 100% of the normal delegated power for secured
facility subject to the condition that the documents are drawn strictly
in conformity with the terms of the LC and other guidelines stipulated
in manual of instructions on Inland Letter of Credit. For the purpose
of arriving at delegated amount only regular Working Capital
Facility shall be reckoned.
II. Negotiation of inland bills drawn under LCs of Other Banks :
Negotiation of Inland Bills by Branches for Constituent Borrower:
 Branch Head (not less than the rank of AGM), Regional Head CAC*
and DMCAC at Circle/SME Sulabh and above authorities are delegated
with powers to discount bills under this scheme upto their normal
delegated powers for secured advances.
Negotiation of Bills by Branches for Non constituents:
Circle Head CACs and above authorities only.
All sanction under the scheme shall be reviewed by NHA.
Note: Regional Head / Circle Head is empowered to select and designate

adequate number of branches coming under their jurisdiction duly
considering the potential for garnering business available in the area.
Cir Nos. 7/2014, 237/2015, 554/2015, 278/2016, 543/2016
P a g e | 36
BILL OF EXCHANGE DISCOUNTING FACILITY TO SMALL ENTERPRISES AT

CONCESSIONAL RATE OF INTEREST (BE-SE)
Purpose To discount/negotiate bills of exchange (pre-accepted bills or bills drawn

under LCs) drawn by Small Enterprises units on reputed joint stock
companies/public sector undertakings representing genuine trade
transactions
Eligibility Micro, Small Enterprises units whose borrowal accounts are standard
assets
Maximum Depending on the need
limit
Guarantee CGMSE cover available wherever eligible
cover
Processing 25% of the normal charges
charges
Ho Cirs 146/03, 193/03
Short Term Loan Scheme for Traders satisfying Micro & Small Enterprises (MSE)
definition, for financing against the Negotiable Warehouse Receipts of Agricultural
Commodities
Purpose Finance against Negotiable Ware house Receipt issued by Accredited

warehouses (Accreditation from Warehouse Development & Regulatory
Authority – WDRA)
Target Traders subject to the following:
Group a) Satisfying MSE definition.
b) Dealing in Agriculture Produce
c) Three years of satisfactory business existence
d) Filed IT Return for last three years Established with VAT registration etc.
Eligibility Existing units with satisfactory dealings for one year with us or their Bankers
upto Moderate Risk/BB Rating.
Type of Short Term Loan - Single Transaction Limit
credit facility
Commodities All Agro Products as per list (list provided at the end of the scheme
guidelines). However, Branches to ensure that the commodity is not under
Selective Credit Control Commodity. Branches to ensure that the produce
pledged is PAID STOCK.
Acceptable  Negotiable Ware House Receipts – Physical as well Demat
ware house  Quality Certification should be incorporated in the ware house receipt or
receipts separate certificates issued by graders/samplers/classifiers holding the
license issued by authorized authorities with regard to the quality of the
goods.
Non  No warehouse receipts loan is to be granted against the warehouse
P a g e | 37
Acceptable receipts issued in the name of the owners of the warehouse, family
ware house members of owners and also in the name of the employees of the
receipts warehouse.
 Warehouse receipt with Grade Certification indicating substandard quality
Maximum  Per party limit shall be fixed based on previous year turnover or projected
loan turnover whichever is less with tenability of one year subject to:
Minimum: Above Rs.10 Lakhs Per Party Maximum: Rs.5.00 Crores per
party
 The overall limit valid for one year shall be sanctioned based upon the
eligibility. Branches to disburse loans as short term loans within the
overall limit sanctioned. (Branches to monitor the outstanding exposure
per party not exceeding the maximum limit fixed for the party at any
point of time)
Assessment  The single transaction limit shall be fixed on the assessed value of the
produce pledged as per the acceptable Negotiable Ware House Receipt
Maximum –75% of the assessed Value (earlier 50% of assessed value)
The assessed value shall be least of the following:
a) Minimum Support price (MSP) - declared by State/Central Government
– Available in website (cacp.dacnet.nic.in) – Generally MSP will be
declared for the financial year for some selective commodities only.
b) Current Market Price – Available in Agricultural Produce
Committee/Local Mandis/Local News papers
c) Value as per Negotiable Warehouse Receipt
If MSP is not quoted by Central/State Government for the produce
mentioned in the NWH, branches shall assess based on least of the other
two.
Margin 25-40% (based on the commodity) of the assessed value. (earlier 50% of
assessed value) Price movement shall be monitored on monthly basis. Action
is to be initiated to reduce the liability, when the margin has come down
below25%
Rate of As applicable for advances to Micro and Small enterprises as per H O Cir.
interest 532/2016 dated 29/09/2016.
Irrespective of extent of collateral comfort, uniform concession of
0.50% to be provided in all the categories.
The ROI shall be based on External Rating, if available. If external rating is
not available, internal rating/scoring may be reckoned.
Duration of The individual loan is repayable within a maximum period of 12 months but
the Loan not exceeding one month less than the shelf life declared in the ware house
receipt
Repayment  In one lump sum before completion of the loan duration as per sanction.
 In case of part delivery, upto date interest and proportionate loan amount
to be recovered
Security -  Lien on the stocks as per the Negotiable warehouse receipt issued. Branch
Prime Manager has to send Request letter to the Warehouse with the original
warehouse receipt tendered by the borrower for availing finance for
ensuring the authenticity of the warehouse receipt and for marking lien in
favour of Bank. Branches shall seek confirmation from warehouses in this
regard before disbursing the loan.
Security –  No Collaterals up to Rs. 25.00 Lakhs
Collateral  Beyond Rs.25.00 Lakhs up to Rs. 50.00 Lakhs: Personal Guarantee
P a g e | 38
 Above Rs. 50.00 Lakhs:

1. Mortgage of immovable property by way of land and building.
2. Assignment of Approved Securities such as LIC Policy, NSC, Post Office
Term Deposits, Government Securities, Kissan Vikas Patra (KVP).
3. Lien on our Bank Deposits
The value of Collateral Security shall be more than 25% of the limit
sanctioned.
Immovable Property by way of Land and Building:
 The immovable property/ies may be in the name of the borrowing unit,

proprietor, partner(s), director(s) of the private limited company or their
close relatives (Extant guidelines) provided their personal guarantee is
available
 Property mortgaged for other loans standing in the name of the borrowing
unit may also be taken as security for this scheme limit subject to
ensuring that the residual value of such property is 25% of the limit
sanctioned.
 Similarly, property mortgaged under this scheme may also be taken as
security for limits permitted to the same borrower under other schemes of
the Bank, if there is any residual value (after ensuring availability of 25%
security coverage for this scheme limit).
Following types of immovable property/ies are not eligible to be taken as

security:
 Agriculture land and those prohibited by statutory authorities. Property

which are tenanted.
 Immovable property/ies standing in the name of HUF who are
proprietor/partner(s) in the borrowing unit.
 Third party property (other than those mentioned in (a) above including
those in the name of Trusts.
 Properties in the name of the directors and their close relatives in the
case the borrower is a Public Limited Company. (However, property
belonging to the promoter/whole time director who is associated with the
day to day affairs of the company may be accepted).
Inspection Pre Disbursement Inspection : Mandatory
Post Disbursement Inspection : Monthly
1. Branches should ensure that the negotiable ware house Receipt is duly
endorsed in favour of the Bank.
2. Branches should get confirmation from Warehouses relating to the
authenticity of the warehouse receipt and get its lien noted with the
warehouse before disbursal of the loan
Delegation The delegation of powers (secured) as per extant guidelines for the overall
limit proposed to be fixed for the party. However sanctioning powers of
BB / moderate risk rated accounts shall vest with the Circle Head-
CAC only
Validity The Scheme is valid till 19.01.2018
Scheme Loan shall be granted under the product code 768 – Loan to MSME - Services
Code 75370 – Negotiable Warehouse Receipt Finance
Ho Cirs 571/2015, 45/2017
P a g e | 39
APPROVED AGRICULTURAL COMMODITIES UNDER THE SCHEME

1 Wheat 60 Raw Milled Medium rice
2 Rice 61 Raw Milled Common (Coarse) Rice
3 Paddy 62 Parboiled Milled Superfine/Fine Rice
4 Jawar 63 Parboiled Milled Medium Rice
5 Bajra 64 Parboiled Milled Common (Coarse) Rice
6 Barley 65 Fine Broken Rice
7 Maize 66 Common Broken Rice
8 Ragi VEGETABLE OILS
9 Soya bean 67 Mustard Oil
10 Mustard seed 68 Groundnut Oil
11 Rapeseed 69 Sesame (Til or Gingelly Oil)
12 Groundnut 70 Coconut Oil
13 Groundnut (pods) 71 Linseed Oil
14 Whole pulses and split pulses 72 Castor Oil
15 Sunflower oilseed 73 Niger Seed Oil
16 Milled pulses 74 Safflower Seed Oil
17 Cotton bales 75 Cotton Seed Oil
18 Cotton seed 76 Rice Bran Oil
19 Jute bales 77 Soya bean Oil
20 Chillies 78 Sunflower Seed Oil
21 Tamarind seeds 79 Maize (Corn Oil)
22 Cumin seeds 80 Mahua (Mowrah Oil)
81 Sal seed Oil(Fat)
23 Castor seeds 82 Oil Seeds
24 Cashew Kernels 83 Taramira Seeds
25 Arecnut 84 Sesame Seeds
26 Black Pepper 85 Cotton Seeds
27 Coriander 86 Linseeds
28 Fennel Seeds 87 Mahua Seed
29 Fenugreek seeds 89 Sal Seeds
30 Guar gum 89 Niger Seeds
31 Sesame seeds EDIBLE NUTS
32 Horse gram 90 Walnuts
33 Isabgol 91 Raw Cashew nuts
34 Black Gram (Flour) 92 Groundnuts
35 Coffee Beans 93 Coconut
36 Sago SPICES
37 Turmeric 94 Ajowan Seeds (Whole and Powered)
38 Ball Copra 95 Mace
39 Cup Copra 96 Seedless Tamarind
40 Cardamom 97 Cloves
PULSES 98 Mixed Masala Powders
41 Urd Whole (Black Gram) 99 Sun Dried Raw Mango Slices and Powder
42 Urd Split (Husked) 100 Compounded Asafoetida
43 Urd split (Un husked) 101 Nutmeg
44 Moon (Whole) 102 Curry Powder
45 Moong Split (Husked) 103 Saffron
46 Moong split (Unhusked) 104 Tejpat
P a g e | 40
47 Masoor (Lentil) Whole 105 Poppy Seeds

48 Masoor (Lentil) Split (Husked) MAKHANA
49 Arhar/Tur (Red Gram) Whole 106 Makhana
50 Arhar/Tur (Red Gram) Split 107 Makhana Powder
(Husked)
51 Kabuli Channa 108 Makhana Fried
52 Channa Whole (Bengal Gram) MISCELLANEOUS
53 Channa Split (Husked)/Dal 109 Guar Seed
Channa
54 Matki/Moth (Whole) 110 Tea
55 Matki/ Moth Split (Husked) 111 Coffee, Arabica and Robusta
56 Yellow Peas (Whole) 112 Tobacco
57 Rajma 113 Rubber
58 Lobia 114 Desi Channa
CEREALS 115 Indian Sugar
59 Raw Milled Superfine/Fine Rice 116 Jaggery
TERM LOANS
Purpose For acquisition of fixed assets (viz, land/building, plant/machinery, other

fixed assets) towards setting up of new units and for expansion,
modernization and diversification in case of existing units
Eligibility Individuals, Proprietorship, Partnership, Ltd. Companies etc.
Quantum Depending on the project cost. (75%)
Repayment Above 36 months in monthly/quarterly/half yearly/yearly installments are
depending on the cash generation and Debt Servicing capacity.
Security 1st charge on fixed assets financed by us.
Collateral Security and Personal/Third Party guarantee shall be insisted
wherever required.
TERM LOAN SCHEME FOR EXTENDING QUASI EQUITY (RISK CAPITAL) ASSISTANCE
TO MSME
Purpose To bridge the gap in the means of finance in the implementation of

MSME projects and to meet any other bonafide expenditure required
for the growth of the business.
Nature of Facility Term Loan.
Quantum of loan Minimum: Rs 25.00 lakhs
Maximum: Rs 10.00 Crores
subject to Sub- debt assistance not exceeding 1/3rd of the Post-
project TNW.
Post Project Tangible Net Worth would mean tangible net worth as on
P a g e | 41
last audited balance sheet + capital (including share premium) infused

after the date of last audited balance sheet till the date of present
proposal for assistance + additional capital (share premium) proposed
in the project.
Eligibility 1. MSME who are enjoying credit facilities with us - 3 years
profitable track record with 2 preceeding years satisfactory
banking credit records. LR/NR for Internal Risk Rating or
AAA/AA/A/BBB or their equivalents.
2. MSME who are NOT enjoying credit facilities with us- 3 years
profit track records of promoters or their concerns in same line
of activity. Satisfactory market report and OPL from existing
banker.
Security Hypothecation of movable asset, mortgage of immovable asset and
collateral securities / CGMSE in case of sole banking.
Creation of II charge on current and fixed asset and collateral
securities in case of consortium /MBA assistance
CGMSE All Eligible loans sanctioned under MSME without any collateral
security/ third party guarantee are to be covered under CGMSE.
Interest Rate of interest as per prevailing guidelines of the Bank linked to
MCLR of the Bank, subject to changes from time to time.
Repayment 7 years including moratorium. Moratorium of principal –Max 3 Years.
Circulars 182/2013, 458/2013
LOAN SCHEME FOR REIMBURSEMENT OF INVESTMENT MADE IN FIXED ASSETS BY
SMES
Purpose To reimburse the investment made on fixed assets, excluding land and
building.
Capital expenses incurred towards creation/acquisition of fixed assets
(other than land and building) during the immediately preceding 6
months may be reimbursed.
Eligibility Existing clients with good track record for at least a period of preceding
three years, Credit Risk Rating (CRR) up to Low Risk 3 (LR3) and which
are categorized under ASCC S1 or S2.
ASCC S1 in respect of those, which are not subjected to risk rating, etc..
Nature of The facility will be permitted as TERM LOAN.
facility
Quantum of UptoRs. 50 lakhs for new machinery and maximum of Rs 15 lakhs for
Loan second hand machinery which is not more than 2 years old from the
original date of purchase.
For arriving at the quantum of finance, written down value as declared in
the financial statements (audited or unaudited as the case may be) or
market price, whichever is less is to be reckoned.
Margin 25% of the investment made in respect of purchase of new machinery.
50% may be stipulated for second hand machinery (also, additional
points as per Term Loan Manual updated till 31.08.2004 have to be
taken care of.)
Security Prime security - Assets created out of loan
Collateral security & Personal / Third party Guarantee obtained for the
existing credit facility shall continue.
Repayment In monthly/quarterly/half yearly installments within a maximum period
of 5-7 years. In deserving cases, repayment holiday up to a maximum of
P a g e | 42
3 months may be permitted.

Cir Nos: 285/06
DOCTORS’ CHOICE
For meeting term loan and/or working capital requirements of the

Purpose applicant, as under:
a. Setting up of clinic, poly clinic, nursing home, hospital, X-ray labs,
pathology labs, physiotherapy centres etc.
b. Purchase of equipment including surgical, X-ray, CT Scan, Electro
medical, operation theatre, air conditioners, refrigerators, generator,
etc. essential for carrying on the business.
c. Expansion/renovation/modernization of existing business premises
d. Purchase of vehicles, ambulance, computers/accessories and other
essential equipment
e. To meet expenses towards business trips
f. In-house medical store managed by a qualified pharmacist
g. Quarters for resident doctor
h. Working capital needs
Eligibility a. All qualified registered medical practitioners in any branch of medical
sciences like Allopathy, Dental, Ayurvedic, Unani, and Homeopathy
having practical experience of carrying on the business.
b. Individuals/Proprietorship/Partner-ship/Companies/Trust., subject to
the following:
Partnerships 50% of the partners should be qualified and registered

medical practitioners
Companies 50% of the promoter/directors should be qualified
and registered medical practitioners
Trusts Trusts should be registered having powers to borrow
and atleast one of the trustees should be qualified
and registered medical practitioner.
Maximum loan Depending on the requirement as per the project report/assessment as

per prevailing guidelines, subject to a MAXIMUM OF RS.5 CRORES
Sub limit for working 20% of the maximum limit subject to a
capital ceiling of Rs.50 lakhs
Upfront fee Upto Rs.5 lakhs: Nil, Above Rs.5 lakhs: 75% of normal charges.
Processing Upto Rs.5 lakhs: Nil,
charges Above Rs.5 lakhs: Rs.100 per lakhs or part thereof.
Repayment Term loan: 5-7 years in monthly installments/EMI, with initial moratorium
of 3 to 6 months.
P a g e | 43
Short term loans: Maximum of 24 to 35 months in monthly/EMI.

Working capital limit: Maximum 2 years, subject to Annual Review.
Gtee cover CGMSE cover available for eligible loans
Ho Cirs 178/03, 281/03
STANDBY CREDIT FOR CAPITAL EXPENDITURE OF SMES
Purpose For meeting unforeseen/urgent requirement for acquisition of fixed assets

like generator set, balancing equipment, replacement of existing
machinery items, tools, moulds, jigs etc. to maintain production and/or to
acquire necessary equipment/machinery for modernization of the unit.
Eligibility Our existing SME borrowers having satisfactory dealings with Asset
classification-Standard Asset are eligible.
Nature of The facility will be permitted as TERM LOAN.
facility
Quantum of i. Quantum of loan is 25% of the original value of the existing plant
Loan and Machinery subject to a maximum of Rs.25 lakhs, at the time of
each renewal of working capital limits.
ii. Sanction of loan shall be valid till the tenability period of working
capital limit.
iii. Disbursement shall be made in one stretch or in stages during the
tenability of the limit against proforma invoices / estimates and
minimum disbursement shall be Rs.25000/- at a time.
Margin 15% to 25% of the cost of the fixed asset to be acquired under the loan
Security Prime security - Assets created out of loan
Collateral security & Personal / Third party Guarantee obtained for the
existing credit facility shall continue.
Repayment The loan is repayable within a period of over 36 months and within 60
months in monthly/quarterly installments.
Cir Nos 45/03, 25/06
LOAN SCHEME FOR SOLAR WATER HEATERS/SOLAR LIGHTING
No Parameters Solar Water Heater Solar Lighting

1 Purpose For purchase & installation
2 Eligibility Salaried individuals (including our Employees) Institutions,
Associations, Small Business establishments, Industrial
Establishments, Hospitals, Hotels, Hatcheries, who are
creditworthy
Professionals and other non-salaried class
3 Quantum of Loan Not exceeding 80% of the Not exceeding 90% of the
project cost (of which project cost (of which 40% of
30% of the project cost the project cost will be the
will be capital subsidy).
the capital subsidy).
4 Margin 20% of project cost. 10% of project cost.
P a g e | 44
5 Capital Subsidy 30% of project cost 40% of project cost.

6 Rate of Interest H. O. Cir 185/2016
7 Repayment not exceeding 5 years
Cir Nos 331/05, 50/06,330/2012,251/2013, box item of circular 16/2013
STANDBY TERM LOAN SCHEME FOR APPAREL EXPORTERS IN SMALL & MEDIUM
SECTORS
Purpose The limit may be utilized for

- Addition or replacement of existing machinery, upgradation of existing
machinery and replacing tools, jigs, fixtures etc..
- Purchase of Software / Hardware for Fashion Designing.
- Repairs / renovation of industrial sheds / factory building.
- travelling abroad for business purposes, participation in Trade Fairs,
Exhibitions abroad or International Fairs in India or any other sales
promotional activities.
Eligibility 1. Export customers having regular credit limits with satisfactory track record
for at least past three yearsfor Apparel Exports and
a. Credit Risk Rating (CRR) upto Low Risk 3 (LR3) and which are categorized
under ASCC S1 or S2. If not risk rated, such of those accounts which are
categorized under ASCC S1 or S2.
2. Minimum export turnover of Rs 1 crore during the immediate preceding
year.
3. Exporters availing facilities under this scheme will not be eligible to avail
facilities under our existing ‘Standby Credit scheme for Capital
Expenditure of SMEs’ (HO Cir 25/06 dated 30.01.2006), etc..
Quantum of UptoRs 100 lakhs, at the time of each renewal of working capital limits or
loan during the tenure of the working capital limits subject to the following
Export Turnover of the unit Maximum ceiling on sanction of
during the immediate Standby Term Loan Limit
preceding year.
a Rs 1 croreuptoRs. 3 crores Rs. 25 lakhs
b Rs 3 croreuptoRs. 5 crores Rs. 50 lakhs
c Rs 5 croreuptoRs. 10 crores Rs. 75 lakhs
d Above Rs 10 crores. UptoRs 100 lakhs.
1. Existing Liabilities / outstanding and proposed limit under the scheme not
to exceed the ceiling prescribed above.
2. For the purpose of Business Promotion Tours and participating in Trade
Fairs, a maximum cap of Rs. 5 lakhs to be fixed per tour / participation in
fair.
3. Minimum disbursement shall be Rs.25000/-.
Margin 15% to 25% of the cost of the fixed asset to be acquired under the loan
Rate of As applicable rate.
interest
P a g e | 45
Security Primesecurity - Assets created out of loan

Collateral security & Personal/Third party guarantee obtained for the existing
credit facility shall continue.
Repayment Above 36 months and within 60 months. Interest is to be repaid as and when
due.
Cir Nos 203/05
SBLC ―Irrevocable Non-Transferable Standby LC ( SBLC) in lieu of guarantees for

inland transactions for MSME clients in favour of Reliance Industries
Limited/Grasim Industries Limited (HO 292/2016)
Purpose To provide Non-Fund Based Working Capital Limit for for MSME units
in favour of Reliance Industries / Grasim Industries.
SBLCs issued for the purpose of performance of contracts/rendering
services/Utilities and for getting back the amount held for warranty of
products are to be treated as Clean.
SBLCs issued securing advance payment/materials received for supply
of materials as per specifications agreed between the parties are to be
treated as secured (Hypothecation of Goods).
Eligibility Our MSME Clients having good track record, satisfactory dealings and
are classified as Standard Assets
Quantum Need Based. Overall Limit to be assessed as per extant guidelines
on Bank guarantees based on past performance and future projections
Margin 25% - Cash margin should be collected before opening SBLC
Bank Guarantee 2 Years
Period Tenure should be restricted to one year wherever SBLC is issued
against advance payment/materials received for supply of materials as
per specifications agreed between the parties
Security- Prime Hypothecation of stocks
Collateral For existing clients, enjoying Limits with us, the collaterals available to
Security the existing limits shall be extended to the Standby LC limit also.
For existing clients, if not enjoying limits with us and for new clients
acceptable collateral to the extent of 50% of the overall Limit
anctioned to the borrower.
Sanctioning CGM/GM-CO-CAC and above authorities
Authority
Processing Chg/ As applicable to financial guarantee
Up front fee/
Others In case of clean limits only accounts rated upto Normal Risk/BBB and
in case of limit secured by stock or other security, accounts rated upto
moderate risk/BB or equivalent ECAI can be financed under the
scheme. If both internal rating and ECAI rating are available, current
ECAI rating to be considered
Ho Circular 292/2016
TERM LOAN SCHEME FOR IMPLEMENTATION OF ENERGY EFFICIENT TECHNOLOGIES

FOR MICRO, SMALL AND MEDIUM ENTERPRISES (MSMES)” AS PER ACTIVITY NO.2
P a g e | 46
OF THE SCHEME OF “TECHNOLOGY AND QUALITY UPGRADATION SUPPORT (TEQUP)

TO MICRO, SMALL AND MEDIUM ENTERPRISES SECTOR (MSMES)”
OBJECTIVE 1. The basic objective of the scheme is to encourage MSMEs in

adopting energy efficient technologies by assisting them in the
implementation of the projects through loans from Banks for which
subsidy (grant) upto 25% of the cost of the project will be provided
by Govt. of India.
ELIGIBLITY Both existing and prospective MSME customers having registration No
subject to conditions relating to their dealings, financials and risk
rating.
1. The MSME unit should have been audited for energy consumption
and have developed a Detailed Project Report (DPR) on Energy
Efficient Technologies prepared by a qualified Energy
Manager/Auditor.
2. After Implementation at least 15% reduction in the energy
consumption by the enterprise and the projected energy
consumption reflected in the approved Detailed Project Report
(DPR) will be taken into consideration.
3. Investments in new plant, machinery and equipment focused
towards enhancing energy efficiency shall only be eligible for
subsidy under the scheme.
4. The project cost may include cost of machines, sales and excise tax,
transportation and transit insurance cost, import related duty etc.
(which will be limited to the maximum cost of machine at F.O.R.
factory of the beneficiary).
COMPOSITION A. For projects with cost upto Rs.1 crore:
OF GOVT. Promoter’s contribution Bank loan
GRANT, 25% of the project cost 75% of the project cost
PROMOTER’S
B. For projects with cost above Rs.1 crore:
CONTRIBUTION
& BANK LOAN Promoter’s contribution Bank loan
20% of the project cost 80% of the Project cost
Project is eligible for Government grant to the extent of 25% of the

project cost, subject to a maximum of Rs.10 Lakhs. Hence, Bank loan
is granted inclusive of the Government Grant. On receipt of grant, that
is to be adjusted to loan account.
SECURITY 1. Prime Security- Assets created out of bank Finance as per
prevailing guidelines of the Bank.
2. Collateral security, personal and third party guarantee as
stipulated by the sanctioning authority, subject to Credit Guarantee
Fund Scheme for Micro and Small Enterprises guidelines.
REPAYMENT OF The loan shall be repayable in 5 years, in 60 monthly installments, with
LOAN 6 months Repayment Holiday. Interest shall be repaid as and when
due.
CODES Product Code : 766
Ho Cir 524/2013, 712/2014
P a g e | 47
XIX D (3).MINISTRY OF MSME HAS INTRODUCED CREDIT LINKED CAPITAL

SUBSIDY SCHEME (CLCSS) FOR TECHNOLOGY UPGRADATION OF THE UNITSIN
SPECIFIED INDUSTRIES.
Purpose To enable MSEs units in Specified Industries for inducting State of the
Art Technology with a view to improve productivity and to bring
improvement in the quality of products, and/or to improve
environmental conditions etc.
Eligibility Sole Proprietorships / Partnerships / Co-operative Societies/Private or
Public Limited Companies in MSE Sector. Priority shall be given to
Women entrepreneurs.
Project Cost No Ceiling
Margin, ROI, As applicable to Term Loans of similar tenure
Security,
Insurance etc
Guarantee cover Cover under Credit Guarantee Scheme for Micro & Small Enterprises
(CGMSE) is available, subject to conditions.
Products / Sub Bio-Tech Industry; Common Effluent Treatment Plant; Corrugated
sectors covered Boxes; Drugs & Pharmaceuticals; Dyes & Intermediates; Industry based
on Medical & Aromatic plants; Plastic molded/Extruded Products and
parts/components; Rubber Processing including Cycle/Rickshaw Tyres;
Food processing (including Ice Cream manufacturing); Poultry Hatchery
& Cattle Feed Industry; Dimensional Stone Industry (excluding
quarrying and mining); Glass and Ceramic Items including Tiles;
Leather and leather Products including Footwear and Garments; Electric
Equipment viz. test and measuring Industrial process control,
Analytical, Medical, Electronic, Consumer & Communication Equipment
etc.; Fans & Motor Industry; General Light Services (GLS); Information
Technology (Hardware); Mineral Filled Sheathed Heating element:
Transformer/ Electrical Stampings/Laminations/ Coils/ Chokes including
solenoid coils; Wires & Cable Industry, Auto Parts & Components,
Bicycle Parts; Combustion Devices/ appliances; Forging & Hand Tools;
Foundries Steel and Cast Iron ; General Engineering works; Gold Plating
and Jewellery; Locks; Steel Furniture ; Toys, Non Ferrous Foundry,
Sports Goods; Cosmetics; Readymade Garments; Wooden Furniture;
Mineral Water Bottle; Paints; Agricultural Implements; Beneficiation of
Graphite and Phosphate; Khadi& Village Industries; Coir & Coir
Products; Steel Re-rolling and / or Pencil Ingot making industries; Zinc
Sulphate; Welding Electrodes; Sewing Machine Industry, Khadi& Village
Industries, Coir & Coir Products, Steel Re-rolling and / or Pencil ingot
making industries, Zinc Sulphate, Welding Electrodes, Sewing Machine
Industry,Industrial Gases, printing industry, Machine Tools.
Incentive Upto 15% Capital Subsidy subject to a maximum of Rs 15 lakhs, only
available for such projects where term loans have been availed from Bank and
the same is subject to ceilings specified under the scheme.
Nodal agency Canara Bank, TUFS Cell, HO, Bangalore
Cir Nos 199/01, 18/02, 122/03, 287/03, 52/05, 287/05, 130/06, 171/06,
290/06, 25/07, 94/07,275/2007,73/2008,360/2009, 210/2010,
291/2010, 158/2011, 251/2011, 06/2012, 18/2012, 57/2012, 82/2012,
201/2012, 247/2012, 48/2013,107/2013, 306/2013, 506/2013
P a g e | 48
Pradhan Mantri Mudra Yojana (PMMY)
Purpose To meet business related Term Loan and Working Capital requirements of
unfunded MSME by bringing them to formal financial system and
extendeing credit to them.
Target group Individuals /proprietorship / partnership firms running as small
manufacturing units, shopkeepers, fruits / vegetable vendors, truck
operators, food-service units, repair shops, machine operators, small
industries, artisans, food processors and others, in rural and urban areas,
whose financing needs are less than 10 lakhs subject to satisfying MSME
(Manufacturing/Service) definition.
Eligibility  Existing customers with satisfactory track record for last 2 years.
 New customers subject to satisfactory OPL from their existing
bankers
 New units subject to satisfactory market opinion on the promoters
 Only Individuals/Proprietorships/partnerships/SHGs are eligible for
finance under the scheme.
 Private limited company, HUF and Trusts are not eligible.
 Units whose Risk rating is High and/or grading as per scoring norms is
Higher/Highest are not eligible
Variants 1.Shishu : Loan amount upto Rs 50000/-
2.Kishore : Loan amount above Rs 50000/- & upto Rs 5 lacs
3.Tarun: Loan amount above Rs 5 Lacs & upto Rs 10 Lacs.
Assessment  Term loan: As per prevailing guidelines – Maximum 85% of the project
& Quantum of cost
finance  Working capital: As per Turnover /MPBF/Cash Budget Method, as the
case may be
 Maximum finance- Rs.10 Lakhs.
Margin Upto Rs 25000: Nil
Above Rs 25000/-: 15-25% ( 30 % in case of bood debts held as prime
security)
Interest As per prevailing guidelines on ROI for MSME
Repayment  Term Loan: 5-7 Years , 2-3 months repayment holiday may be
Granted
 Working capital : As per prevailing guidelines
Processing  Upto Rs 5 Lacs : Nil
Charges /  Above Rs 5 Lacs : As per prevailing guidelines
Upfront fee
Prime security Assets created out of loan - Hypothecation of moveable assets and/or
Mortgage of immovable property and existing business assets of the
borrower only.
Collateral  No collateral security/Third party guarantee
security  All such eligible loans to be mandatorily covered under CGFMU (Credit
Guarantee Fund for Micro Units) of NCGTC (National Credit Guarantee
Trustee Company Ltd of GoI)
 Credit Guarantee is available on a portfolio basis and not on individual
loan basis, i.e., all the eligible loans granted under PMMY shall be
automatically covered under CGFMU and branches need not cover the
loans individually.
 The guarantee scheme shall be effective from 01.04.2017, i.e., for
loans granted under PMMY scheme on or after 01.04.2017. Covering
P a g e | 49
eligible loans under the guarantee scheme and payment of guarantee

fee shall be centralized and taken care at Head Office level.
 In BAM83 scheme code 75410 should invariably be furnished for PMMY
loans.

Personal Personal guarantee of partners/promoters may be stipulated
guarantee wherever applicable
CGMSE cover All eligible accounts to be covered under CGMSE of CGTMSE.
Ref Cir 181/2016
PRIME MINISTER EMPLOYMENT GENERATION PROGRAMME (PMEGP)
Purpose To generate employment in rural as well as urban areas.

Eligibility i. Age above 18 years, No income ceiling for loan.
ii. For setting up of project costing above Rs.10 lakhs in the manufacturing
sector and above Rs. 5 lakhs in the business /service sector, the
beneficiaries should possess at least VIII standard pass educational
qualification.
iii. Loan for only for new projects.
iv. Only one person from one family is eligible for obtaining financial
assistance for setting up of projects under PMEGP. The ‘family’ includes
self and spouse.
Project cost a. Cost of the project to be set up under the scheme, should not exceed
Rs. 25 lakhs in respect of manufacturing activity and Rs. 10 lakhs in
respect of Service / business activity for all categories of eligible
borrowers.
Loan General Category Upto 90% of the project cost
amount beneficiaries
Weaker Section Upto 95% of the project cost
beneficiaries/Institutions
Margin Margin Money / subsidy is provided by KVIC as under

Money from Categories of beneficiaries Beneficiary’s Rate of
KVIC under PMEGP contribution Subsidy (of
(of project project cost)
cost)
Area (location of Rura Urban
project/unit) l
General Category 10% 15% 25%
Special (including SC / ST 5% 25% 35%
/OBC Minorities/Women, Ex-
ser, Physically handicapped,
NER, Hill and Border areas
etc.
P a g e | 50
Security a) Assets created out of the bank's finance.

b) Personal guarantee of the proprietor / promoter.
c) Eligible units to be covered under Credit Guarantee Fund scheme for
Micro & small Enterprises – CGMSE. (excluding Margin Money / subsidy
component)
Repayment 3 to 7 years with an initial moratorium not exceeding 6 (six) months.
CGMSE All eligible accounts to be covered.
Web Portal All sanctions and disbursements details to be updated in the PMEGP Web
Portal of KVIC. Subsidy will be released based on the Web Portal details only.
CirNos 294/08,73/09,132/09,142/09,42/10,86/10,299/11,17/12,66/12, 121/12,
151/12, 349/12,47/13 and 58/13
STANDUP INDIA
Purpose For setting up a New Enterprise (Only Green Field Project) in Manufacturing,
Trading or Services Sector by SC/ST/Women Entrepreneur.
Green Field Project signifies, the first time venture of the borrower in the
Manufacturing or Services or Trading Sector.
The borrower can apply loans either directly at the branch or through SIDBI‘s
Stand-Up India Portal – www.standupmitra.in or through Lead District
Managers (LDMs)
Eligibility Individuals, Proprietorships, Partnerships, Limited Liability Partnership, Private
Limited Companies, Public Limited Companies
Quantum Minimum above Rs 10 Lacs and Maximum Rs 100 Lacs
Margin 25% of the Project Cost. Margin money can be provided in convergence with
eligible Central/State schemes. While such schemes can be drawn upon for
availing admissible subsidies or for meeting margin money requirements, in
all cases, the borrower shall be required to bring in minimum of 10% of the
project cost as own contribution
Collateral  No collateral security / third party guarantee shall be obtained. All
Security loans granted under the scheme shall be mandatorily covered
under Credit Guarantee Scheme for Stand Up India (CGSSI)
 Personal guarantee of Partners/Promoters/Directors to be obtained wherever
applicable
Repayment Seven Years for Term Loan. Repayment Holiday: 18 months may be permitted
Working Capital – As per prevailing guidelines
Others  Each Branch to identify and sanction minimum one loan each with loan
amount above
 Loans should be covered under Credit Guarantee Fund Scheme for Stand-
Up India Loans (CGFSIL) through the National Credit Guarantee Trustee
Company (NCGTC)
 To be eligible for guarantee cover, the Rate of Interest charged should be
the lowest applicable rate for the category (as per rating) and should not,
in any case, be more than 3% over the MCLR plus Tenor Premium, if any,
P a g e | 51
for the loan

 Covering eligible loans under the guarantee scheme and payment of
guarantee fee shall be centralized and taken care at Head Office level.
 For Loans granted under the scheme, no collateral security and/or third
party guarantee should be obtained. This is applicable to loans granted to
Traders, SHGs and Educational Institutions also which were so far not
covered by any guarantee scheme
 Under BAM83 option select : 100000116 Credit Guarantee Scheme CGSSI
Scheme 75430- STAND UP INDIA SCHEME
Code
Cir Nos  144/2016, 314/2016, 208/2017
Credit Guarantee Fund for Micro & Small Enterprises (CGTMSE)
(HO Cir 100,129,173,218,304,504,699,750,752/2016, 25/2017)
Govt. of India and SIDBI jointly setup CGTMSE.
CGTMSE CGTMSE cover shall be available for eligible collateral free credits upto
Rs.200.00 lacs extended by banks by way of term loan and/or working
capital facility to eligible MSME borrowers including information
technology and software industries.
CGTMSE coverage is MANDATORY for loans above Rs.10.00 lakhs and

upto Rs.200.00 lacs unless borrower is not ready to bear the fee and
offer collaterals acceptable to bank (Coverage amount enhanced from
Rs.100.00 lacs to Rs.200.00 lacs wef 31.12.2016). For loans / advances
upto Rs.10.00 lacs where collaterals are not to be obtained, CGTMSE
coverage is compulsory. Discretion given to the sanctioning authorities
to waive obtention of CGMSE cover stands withdrawn.
CGTMSE Obtention of CGTMSE cover may be waived by the respective sanctioning
Waiver authority subject to the following.
The borrower provides primary security or primary and collateral security

put together in the form of land and building to the extent of 75 % of
the sanctioned limit, in addition to the security of assets created out of
our finance (exposure, if more than one limits are sanctioned) and the
borrower should be rated as LOW/NORMAL or MODERATE Risk and all
the accounts are under standard category.
For computation of value for 75% of the sanctioned limit, and to

distinguish the primary and collateral security, consider an example in
the case of financing an industrial shed to be built on the land owned by
the proposed borrower, wherein, building will be the asset created out of
our loan proceeds and land will be collateral. This is for the specific
purpose of computation of 75% for waiver of CGTMSE cover only.
Because, in such cases, as per policy guidelines, both land and building
P a g e | 52
will be treated as Prime Security.

Credit facilities Fund based and/or Non fund based credit facilities extended by Member
eligible under Lending Institutions (MLI) to a single eligible borrower in the Micro and
the scheme: Small Enterprises sector for credit facility not exceeding Rs.50.00 lacs
(RRBs / FIs) and Rs.200.00 lacs (Scheduled Commercial Banks and
select Financial Institutions) by way of term loans and / or working
capital facilities on or after entering into agreement with the Trust,
without any collateral security and / or third party guarantees.
Credit facilities extended by more than one bank and / or financial

institution jointly and / or separately to eligible borrower upto a
maximum upto Rs.200 lacs per borrower subject to ceiling amount of
individual MLI or such amount as may be specified by the Trust.
Guarantee  All proposals for CGMSE cover above Rs.50 lacs upto Rs.200 lacs will
coverage for have to be rated internally by bank and should be investment grade.
credit facilities
above Rs. 50  Credit facilities of above Rs. 50 lakhs under CGMSE scheme may be
lakhs - extended to the eligible enterprises, subject to the following;
Internal
guidelines.
Viability parameters
Current Ratio 1.25 % and above.
Promoter's contribution minimum 30% of project cost.
Debt Equity Ratio 2:1
Overall DSCR 1.50 and above
Fixed Assets Coverage 1.4 and above
Ratio(FACR)
Internal Rate of Return (IRR) 5% and above from estimated
weighted average cost of funds.
Repayment Period in respect of Up to 6 years excluding
Term Loans moratorium period
 (Relaxations can be permitted by the CM/DM and above
authorities at Branches / RO / CO with proper justification).
Sanction to be reviewed and confirmed by Next Higher
authority at Ro/CO before release of loan (H.O Cir
557/2017)
 All proposals above Rs. 50 lakhs will have to be rated internally
and accounts with Risk Rating of LR 1, 2,3 and Normal Risk (NR)
only to be considered for financing.
 MSE Units who approach credit facilities for the first time are
to be duly verified through Due Diligence services of the
Rating Agencies.
 The sanctioning authority to satisfy about the capability of the

promoter entrepreneur, to implement the project and manage the
enterprise successfully, keeping in view the past experience,
technical knowledge/ availability of professional/ technical &
managerial team.
 The sanction to be reviewed and confirmed by the next higher
P a g e | 53
authority at RO / CO before disbursement of the loan.
 Any credit facilities which have been sanctioned by the lending

institution with maximum interest rate not more than 14% pa,
including cost of guarantee cover, would be eligible for coverage
under credit guarantee scheme.
Coverage of loans above Rs. 50 lakhs: Permitting Authority:
To enable faster Credit decisions, the said guidelines are since modified
and respective sanctioning authorities are delegated to take decision on
coverage of loans above Rs 50 lakhs upto Rs 200 lakhs provided the
stipulated benchmarks are complied with.
Time limit for Loans Sanctioned during the Lodging of applications prior to the
lodgment of quarter expiry of the quarter
applications April-June July-September
for guarantee July-September October-December
cover: October-December January-March
January-March April-June
The time limit for lodgment of applications for guarantee cover is linked
to the date of sanction of credit facility and NOT to the date of
disbursement/release of credit facility to the borrower.
Not eligible
Presently CGMSE cover is not available for credit facilities extended to
retail traders, educational institutions, training institutes, training-cum-
incubator centres, self help groups, joint liability groups and Medium
Enterprises.
Percentage of Cover:
Category Maximum extent of Guarantee where credit facility is:
Upto Rs.5 lakh Above Rs.5 Above Rs.50 lakh

lakh upto Rs.50 upto Rs.200 lakh
lakh
Micro Enterprises 85% of the 75% of the Rs.37.50 lakh plus
amount in amount in default 50% of amount
default subject to subject to a above Rs.50 lakhs
a maximum of maximum of subject maximum of
Rs.4.25 lakh Rs.37.50 lakh Rs.100.00 lakh
Women entrepreneurs/ Units Rs.40.00 lakh plus
located in North East Region 50% of amount
(incl. Sikkim) (other than 80% of the amount in default above Rs.50 lakhs
credit facility upto Rs.5 lakh to subject to a maximum of Rs.40 lakh subject maximum of
micro enterprises) Rs.100.00 lakh
P a g e | 54
All other category of Rs.37.50 lakh plus

borrowers 75% of the amount in default 50% of amount
subject to a maximum of Rs.37.50 above Rs.50 lakhs
lakh subject maximum of
Rs.100.00 lakh
Composite all in GUARANTEE FEE:
Credit Facility Annual Guarantee Fee (AGF) [%

per annum]
Women, Micro Enterprises Others
and units in North East
Region (incl Sikkim)
Upto Rs 5 lakhs 0.75 % 1.00 %
Above Rs 5 lakhs and 0.85 % 1.00 %
upto Rs 200 lakhs
of sanctioned credit facility shall be paid upfront to the Trust by the Institution availing of
the guarantee cover within such period as may be specified by the Trust.
The demand on MLI (Bank) for AGF in respect of fresh guarantees would be raised upon
approval of guarantee cover. The guarantee start date (i.e., material date in terms of
Credit Guarantee Scheme) would be the date on which proceeds of AGF are credited to
Trust‟s Bank account. The AGF/guarantee cover would be valid for one year from the
material date i.e., Guarantee start date.
In the subsequent financial year in the month of April, demand for Annual Guarantee Fee
(i.e., for 2nd AGF) would be raised for the guarantees approved in the previous financial
year (till March 31st) for which the AGF has been received till March 31. Such demand
would be with effect from the date on which previous AGF is expiring till March 31 of that
year.
The AGF demands for subsequent years would be on “Full Financial Year basis”
excepting for the terminal year of guarantee where AGF demand would be till validity of
guarantee cover.
From September 01, 2013 onwards, CGTMSE shall be generating a composite demand,
inclusive of Service tax, together with the Annual Guarantee Fee as applicable. (Cir
583/2013)
For loan sanctioned on or after 1.1.2013 service fee is replaced by composite all in
guarantee fee vide HO Cir 406/2012- as mentioned above.
CGTMSE now informed that, based on our NPA level, the applicable Risk Premium is 10% of
Standard Rate ( 0.75 %, 0.85% or 1% ) + applicable taxes and premium at these rates
shall be payable for loans/ advances granted onor after 1 st April 2016 & 1 st April 2017 (HO
cir 173/16, 134/17).
Risk Premium for FY 2016-17 & 2017-18 is:
Standard Risk Premium on Risk Premium Total Premium

Rate account of higher onaccount of Claim payable
NPA payout Ratio (ASF/AGF) from
P a g e | 55
01.04.16
0.75% 0.075% 0 0.825%
0.85% 0.085% 0 0.935%
1.00% 0.10% 0 1.10%
Mode of payment of Guarantee Fee/Annual Service Fee:
Once the applications are lodged with CGTMSE by SME Section at concerned Circle office,
CGTMSE would be sending Demand Advices for payment of Guarantee Fee.
Reimbursement Of 50% Entry Fee To New Units (Cir 66/2010):
 Reimbursement of 50% of entry fee to new Micro and Small Enterprises accounts
sanctioned on or after 01.02.2010.and covered under CGMSE scheme.
 Reimbursement to be done at the time of closure of the loan or on completion of 5
years, whichever is earlier by debiting to General Charges Account.
 GUARANTEE fee to be reimbursed to those accounts who meet their repayment
commitment and is a Standard account at the time of reimbursement.
Invocation of Guarantee:
 If CGMSE covered account becomes NPA, Branch has to inform the Date of NPA to Circle
Office, MSME Section on quarterly basis March/June/September/December. Immediately
Circle Office to inform the date of NPA in particular calendar quarter, by end of
subsequent quarter to CGTMSE by online.
 Immediately after that, recovery proceedings should be initiated (including recall,

possession, SARFAESI Act, Seizure etc) and loan card to be submitted, suit to be filed
etc.
 Branch should claim with CGTMSE through R&L section, Circle Office within the
stipulated time norms as below:
Lock in Period Date of NPA within Date of NPA after

Lock in Period Lock in Period
12 months from the Claim should be Claim should be
date of last preferred within preferred within
Loan Sanctioned disbursement or date one year of expiry One year from date
before 31.12.2012 of payment of of lock-in-period of NPA.
guarantee fee
whichever is later
18 months from the Claim should be Claim should be
date of last preferred within preferred within
Loan Sanctioned on disbursement or date two years of expiry two years from
or after 01.01.2013 of payment of of lock-in-period date of NPA.
guarantee fee
whichever is later
P a g e | 56
If the claim is not preferred with CGTMSE as per the above time norms, CGMSE will
not consider the claim.
The following Conditions should satisfied for Invocation of Guarantee:
 The Guarantee in is force at the time of account turning NPA.

 The Lock in period of 18 months from either the date of last disbursement of the loan to
the borrower or the date of payment of guarantee fee in respect of credit facility to the
borrower, whichever is later has completed.
 The amount due and payable to the Bank in respect of the credit facility has not been
paid and the dues have been classified by the bank as NPA. Provided that the bank shall
not make or be entitled to make any claim on the Trust in respect of the said credit
facility if the loss in respect of the said credit facility had occurred owing to
actions/decisions taken contrary to or in contravention of the guidelines issued by the
Trust.
 The loan facility has been recalled and the recovery proceedings have been initiated
under due process of law. For loan granted on or after 01.01.2013, initiation of legal
proceeding as a pre condition for invoking guarantee shall be waived for credit facilities
upto 50000/- subject to the condition that the executive committee of MLI headed by an
officer not below the rank of General Manager should examine and waive the same( Ref
406/2012)
 The claim should be preferred by the Bank in such manner and within such time as may
be specified by the Trust in this behalf.
Claim:
 The Trust will pay 75% of the guaranteed amount on preferring of eligible claim by the
lending institution, within 30 days, subject to the claim being otherwise found in order
and complete in all respects. The Trust will pay to the Bank interest on the eligible claim
amount at the prevailing Bank Rate for the period of delay beyond 30 days.
 The balance 25% of the guaranteed amount will be paid on conclusion of recovery
proceedings by the Bank.
 In the event of default, the Bank shall exercise its rights, if any, to takeover 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 Bank to the Trust before it claims the
remaining 25% of the guaranteed amount.
 Bank shall be liable to refund the claim released by the Trust together with penal
interest at the rate of 4% above the prevailing Bank Rate, if such a recall is made by the
Trust in the event of serious deficiencies having existed in the matter of
appraisal/renewal/follow up/conduct of the credit facility or where lodgment of the claim
was more than once or where there existed suppression of any material information on
part of the Bank for the settlement of claims. The Bank shall pay such penal interest,
when demanded by the Trust, from the date of the initial release of the claim by the
Trust to the date of refund of the claim.
Settlement of Second / Final Installment of Claim - Modification in the guidelines

by CGTMSE (H.O Cir 598/2017)
 In cases where the legal action has been initiated under SARFAESI Act or RRA, the MLIs
may be allowed to lodge 2nd claim after the lapse of three years from date of action
P a g e | 57
(possession date) under Section 13(4) of SARFAESI Act and the date of Recovery
Certificate issued by the Tehsildar respectively subject to following confirmation from the
Banks.
 Personal Guarantees have been invoked and no further recovery is possible.
 No tangible secured assets have been left for disposal and no further recovery is
possible. The entire recoveries made in the account have been duly indicated in the 2nd
claim application/have been passed on to CGTMSE.
The above provisions shall be applicable only to the credit facilities sanctioned by MLIs on or
after January 01, 2013 and covered under CGS. In respect of settlement of second / final
installment for cases prior to January 01, 2013, second / final installment will be settled on
conclusion of recovery proceedings or till the decree gets time barred. With regards to
conclusion of recovery, following 4 scenarios are considered as conclusion of recovery
proceedings
 If legal action is initiated only under SARFAESI Act and whatever assets available were
sold off and the amount is remitted to the Trust. Also, the borrower is not traceable and
the Networth of the Personal Guarantor is not worth pursuing further legal course.
 If amount is recovered through sale of assets under SARFAESI and no other assets are
available and legal action is taken under any forum such as RRA, Civil Court, Lok Adalat
or DRT where there is no further means to recover the money from the borrower and
the Networth of the Personal guarantor is significantly eroded.
 If no assets are available and the borrower/ Promoter is absconding and the Networth of
the Personal guarantor is significantly eroded.
 If no assets are available and the legal action is withdrawn as the borrower is
absconding and it may not be worth pursuing legal action.
In view of the above, second/final claim will be considered for settlement after obtaining a
certificate/declaration to this effect from the concerned authority in charge of the Bank,
confirming applicability of any of the aforesaid four scenarios
Moreover, the entire recoveries made in the account should have been duly passed on to
CGTMSE before preferring for second / final installment. However, the second/final claim
would be settled only after the lapse of minimum period of 3 years from the date of
settlement of first claim
Appropriation of amount realized by the Bank in respect of a credit facility after

receipt of claim amount
 Subsequent to the Trust having released a sum to the Bank towards the amount in
default, if Bank recovers money subsequent to the recovery proceedings initiated by it,
the same shall be deposited by the Bank with the Trust, (after adjusting towards the
cost incurred by Bank for recovery of the amount).
 The Trust shall appropriate the same first towards pending service fee, penal interest
and other charges due to the Trust, if any, in respect of the credit facility towards which
the amount has been recovered by the Bank, and the balance if any, shall be
appropriated in such a manner so that losses on account of deficit in recovery of the
credit facility between the Trust and the Bank are in the proportion of 75% and 25%
respectively.
P a g e | 58
Appropriation of the amount recovered after closure of the account
 However it is to be ensured that remittances made to CGTMSE on account of

recovery in borrower’s account does not exceed the claim settled amount.
 However, if any amount due to the Trust remains unpaid beyond a period of 30 days
from the date on which it was first recovered, interest shall be payable to the Trust
by the Bank at the rate which is 4% above Bank rate for the period for which
payment remains outstanding after the expiry of the said 30 days.
Appropriation of amount received from the lending institution
 The amount received from the Bank shall be appropriated in order in which the
service fee, penal interest and other charges have fallen due.
 If the service fee and the penal interest have fallen due on the same date, then the
appropriation shall be made first towards service fee and then towards the penal
interest and finally towards any other charges payable in respect of the eligible credit
facility.
Credit Enhancement Guarantee Scheme for Schedule Caste ( CEGSSC) ( Cir

116/2016)
 Ministry of social justice and empowerment has come out with CEGSSC, which is being
implemented by Industrial Finance Cooperation of India Limited (IFCI). The scheme
covers small and medium enterprises (Registered companies, societies and partnership
firms) promoted and run by SC entrepreneurs in manufacturing, trading and services
sector.
 Individuals and sole proprietorship firms are not eligible under the scheme. Micro
enterprises are also not eligible.
 Registered companies (including one person companies), societies and registered

partnership firms having more than 75 % shareholding by SC individuals with
management control for 12 months are eligible.
 Initial corpus of fund is Rs 200 Cr is allotted and shall be placed in a ―No Lien Account
by IFCI ltd.
 Guarantee shall be available on a ―first come, first served basis till the availability of
the corpus fund
 The units should not be covered under any other State/central government
subsidy/grant scheme.
 Minimum loan amount is Rs 25 lakhs and no limit on maximum loan amount. Maximum
guarantee amount is Rs 500 lakhs.
 Cover is available on TL and composite loans only extended without any collateral
security/Third party guarantee. Stand alone WC and non fund based facilities are not
eligible when availed independently.
 Guarantee fee: First Year → 0.75 % for women SC entrepreneurs and 1 % for other
SCs. Annual renewal fee →1 % (exclusive for taxes) for all.
P a g e | 59
 Lock in period is12 months from the date of last disbursement. Guarantee cover will be
available for a period of 7 years or the repayment period of the advance whichever is
less.
 Branches desirous of availing the guarantee cover shall have to take prior approval from
IFCI . For in principal approval from IFCI, branches shall make use of the indicative
appraisal format and indicative due diligence module suggested by IFCI.
 Disbursement should be completed within a maximum period of 30 days from the date
of approval. Branches have to sanction theloan only after receipt of the Registration
number from IFCI.
 The Registration no. issued by IFCI shall be liable for cancellation if the sanction letter is
nor received within the stipulated period of 30 days.
 On receipt of the sanction letter, IFCI shall issue Guarantee payment Notice (GPN) for
payment of Guarantee fee (Plus applicable taxes), conveying the Unique Borrower ID
and the guarantee cover eligible for the loan as per CEGSSE guidelines.
 The guarantee fees for the first year shall be paid within 30 days from the date of GPN
or within 30 days of first disbursement of the loan, whichever is later, but not exceeding
90 days from the date of sanction. A confirmation of payment of guarantee fees to IFCI,
giving reference to the GPN and Borrower ID shall be sent within 15 days from the date
of payment of guarantee fees.
 The guarantee cover shall commence from the date of receipt of guarantee fees by IFCI.
 Quarterly statement of Borrower wise loan sanction, disbursement and outstanding

position including default, if any, has to be submitted by the branches within 15 days
from the end of each quarter.
 IFCI shall entertain queries/ communication/ correspondence only from the designated
Nodal Office of the Bank. In our Bank, MSME Wing, HO shall be the nodal point for
implementation of the scheme. Branches shall take up all matters relating to the
scheme with MSME Wing, Head Office through the Circle Office concerned.
The extent of guarantee cover that will be available is furnished below:

Loan amount
Category Rs. 25 lakhs to More than Rs. 2.00 More than Rs.
Parameters
upto crores to upto Rs. 5.00
Rs. 2.00 Crores 5.00 crores Crores
80% of the 70% of the 60% of the

Amount of
sanctioned facility sanctioned facility sanctioned facility
Guarantee Fee
Registered
80% of the amount in 70% of the amount in 60% of the amount
Companies
Guarantee default subject to default subject to in default subject
Obligation maximum of amount maximum of amount to maximum of
of guarantee cover of guarantee cover
amount of
P a g e | 60
guarantee cover
Min Cover Rs. 20 lakhs Rs.1.60 Cr Rs. 3.50 Cr

available
Max Cover Rs.1.60 Cr Rs. 3.50 Cr Rs.5.00 Cr
available
Amount of 60% of the sanctioned facility
Guarantee Fee
Guarantee 60 % of the amount in default subject to maximum of
Registered Obligation amount of guarantee cover
Partnership
Min Cover Rs. 15 lakhs
firms
available
Max Cover Rs. 5.00 Crore
available
REHABILATATION OF SICK SME UNITS:
Purpose To provide adequate and timely assistance to potentially viable MSE units
which have already become sick or likely to become sick.
Definition of A Micro And Small Enterprises is considered ‘sick’ when
Sick MSE a) Any of the borrowal account of the enterprise remains NPA for three
units months or more OR
b) There is erosion in the net worth due to accumulated losses to the
extent of 50 % of its net worth during the previous accounting year.
The stipulation that the unit should have been in commercial production
for at least two years has been removed.
Based on a viability study, the viable/potentially viable units are to be
provided rehabilitation package.
Stipulated time The decision on viability of the unit should be taken at the earliest but not
frame for later than 3 months of the unit becoming sick under any circumstances.
deciding the
viability of a
unit.
Incipient An account may be treated to have reached the ‘Handholding Stage’ if any
sickness or of the following events are triggered:
‘handholding
stage’ is a. There is delay in commencement of commercial production by more
defined. than SIX months for reasons beyond the control of the promoters;
b. The company incurs losses for TWO years or cash loss for ONE year,
beyond the accepted timeframe;
c. The capacity utilization is less than 50 % of the projected level in terms
of quantity or the sales are less than 50 % of the projected level in
terms of value during a year.
Hand holding support to such units should be undertaken within a maximum

period of TWO months of identification of such units.
P a g e | 61
Relief/ RELIEFS AND CONCESSIONS AVAILABLE FOR THE REHABILITATION

concessions OF SICK MICRO AND SMALL ENTERPRISES
extended
there under MICRO ENTERPRISES:
are:
The package of reliefs may essentially comprise of rephasing the existing
loans into repayment in convenient instalments payable in next 5 to 7
years.
In case of need to carve out Working Capital Term Loan (WCTL) and Funded
Interest Term Loan (FITL), the norms applicable to Small Enterprises can be
applied.
SMALL ENTERPRISES:
1. Rephasement/Reschedulement of existing term loans:

The repayment programme of the existing term loans is rephased/
rescheduled so as to be repaid within a maximum period of 10 years.
2. Working Capital Term Loan (WCTL):
The principal deficit in the working capital may be segregated as working
capital term loan (WCTL). Such WCTL may be carved out based on the
drawing power as at the end of the month prior to the cut off date
arrived at for restructuring. The unduly overdue Bills liability which is
considered unrecoverable, if any shall also be treated as a component
under deficit to arrive at the WCTL component. WCTL may be repaid in a
period of 5 years.
3. Funded Interest Term Loan (FITL):
Unrecovered interest if any, on working capital and term loan may be
segregated into Funded Interest Term Loan (FITL). This may be payable
within 3 years.
4. Deferment of interest:
5. There may be cases when an enterprise would not be generating enough
cash to make payment of interest under restructuring due to delay in
commencement of operations or achieving break-even. In such cases,
the interest accruing for a period maximum of 6 months may be
deferred which would be payable within 3 years.
6. Fresh finance:
Fresh finance to meet essential capital expenditure and working capital
requirements may be provided by way of term loan and working capital
credit limits. The term loan shall be repaid within a period of 7 years.
Such fresh finance shall be granted only with a minimum margin of 15%
from the promoter.
7. Promoter’s contribution:
Promoters’ sacrifice and additional funds brought by them should not be
less than 15% of the Bank’s sacrifice.
8. Financial Benchmark Parameters:
The formulation of package will involve evaluation of viability of the
enterprise and the same shall be examined by adhering to essential
financial benchmark parameters furnished in HO Cir 407/2012
Appendix II
Cir Nos: 103/02,270/2012,407/2012,34/2013
P a g e | 62
RESTRUCTURING OF ADVANCES: (HO Cir 595/2013)- CANARA SAHAYATA
It is a process by which bank grants concessions to the borrower for economic or legal
reasons relating to borrower’s financial difficulty.
Any of the following actions distinctly or jointly will be termed as restructuring:
 Re-phasing /Rescheduling the repayment in case of an outstanding term loan

with or without change in balance repayment period/ instalments
 Downward variation of interest payment terms (not under competitive reasons)
 Conversion of irregularities or a portion in outstanding working capital limits into

WCTL/FITL payable over a period
 Conversion of irregularities or portion in outstanding working capital limits/term

loans into debentures/equity.
 Rescheduling the payment of interest outstanding/accruing on term loans into

FITL / deferment or conversion into FITL/debentures/equity.
 Changes in terms of payment of interest/instalment on the prevailing

restructured facilities.
Eligible categories -
Standard, Sub-Standard and Doubtful assets

Ineligible categories -
1. Accounts classified as Loss assets, Non viable entities and not possessing reasonable
certainty of repayment of accounts on restructuring.
2. Willful defaulters and / or borrowers indulging in fraud and malfeasance.
3. BIFR cases without their express approval.
4. Borrowers affected by natural calamities and the advances already restructured or
eligible to be restructured under RBI guidelines in this regard.
5. Terms of restructuring not agreed by the borrower-client.
IDENTIFICATION:
To be done primarily at branch level through evaluation of conduct of the account and based
on the intensity of the irregularities and probable chances of continuing default and
eventually resulting in classification of the asset as non performing in the books of the bank.
An impending default may be considered for an advance being found eligible for
restructuring.
The borrowers displaying delinquency deficiencies from the Special Watch List.
Advances slipped to NPA can also be brought under restructuring.
P a g e | 63
Identification of the borrower will have to be confirmed by the committee at C.O.s formed
for this in case of advances of above Rs.25.00 lacs and wherein action has been initiated
under SARFAESI Act.
GENERAL PRINCIPLES:
The restructuring package should not involve rescheduling/ restructuring/ re-negotiation of

terms retrospectively. Funding of unrecovered interest will not be considered as
retrospective restructuring.
Normally, restructuring cannot take place without the formal consent/application of the
debtor. However, the process of restructuring can be initiated by the Bank in deserving
cases subject to the customer agreeing to the terms and conditions.
No account will be taken up for restructuring by the Bank unless financial viability is
established and/or there is reasonable certainty of repayment as per the terms of the
restructuring package. The test of viability and broad terms of financial package are as
given in the policy framed herein.
Those advances brought under the provisions of CDR, SICA, Sick SSI/weak unit
rehabilitation packages, restructuring of advances in such cases will be as per the general
terms that are prevailing and guidelines issued in this regard.
Repeated restructuring of advances will not be resorted to unless there are valid and strong
reasons that warrant such restructuring. Restructuring in all cases should be based on the
viability parameters that primarily look into the cash flows of the borrower.
If in certain cases, the viability is not established and Bank is not able to go ahead with
restructuring of the advances, in such instances, immediate steps shall be taken for further
recovery action as per extant guidelines besides exploring the possibility of exiting from the
exposure.
Establishment of Viability and Viability Study:
Stages:
Industrial / Manufacturing units - Before / after commencement of commercial

production/operation.
Other than Mfg enterprises - Before / after commencement of operations
Consumer loans / Housing

Loans / Agri loans / Capital
Market exposures / other
Advances - Any time before classification as loss assets.
Basis for Restructuring:
Financial viability of the future operations to be established based on the viability

parameters.
Reasonable certainty of repayment by the borrower
P a g e | 64
Viability Study:
If the proposal is limited to re-phasement / re-schedulement of existing loans, the

concerned branch and/or processing section at administrative offices can undertake the
exercise satisfying themselves about the viability irrespective of amount of loan or category.
In other cases wherein other reliefs are considered with/without re-phasement / re-
schedulement:
The following will be adopted in other cases wherein other reliefs are considered
with/without rephasement/ reschedulement:
a) Micro Enterprises: In case of advances to micro enterprises eligible for restructuring,

the viability study shall be based on the cash flow / income generation supported by a
viability report prepared by the branch officials.
b) All Other Enterprises:
• Outstandings not exceeding Rs.25 lakhs: Branch may compile the viability report.
• Outstanding not exceeding Rs. 2 Cr, but more than Rs.25 lakhs:
The viability study may be through Chartered Accountants/ PAC/ PAG/ Technical Field
Officers, valuer from the Banks’ panel of valuers experienced in conducting such viability
studies/. Bank may put in place a system of having a panel of technical / financial
consultants who can be entrusted with such assignments.
• Outstandings exceeding Rs 2 Cr:
(i) In case of sanctioned limits falling under the sanctioning powers of Circle authorities, the
Viability study be conducted by the PAC of Circle office.
(ii) In case of enterprises with outstanding advances falling under the sanctioning powers of
authorities at H.O, the viability study be conducted by PAG, H.O.
(iii) In case of those under (i) and (ii) above also, reputed consultants under the panel of
CDR / IBA or any other reputed institution can be entrusted in exceptional circumstances
with the approval of the sanctioning authority or GM (HO).
Advances granted to pursue agricultural. Activities:
In case of agricultural activities beyond Rs.25.00 lacs, assistance of AEOs/Agricultural

consultancy cell at H O can be utilized. The screening committee at CO/HO can decide on it.
P a g e | 65
Financial Benchmark Parameters:
a. Micro & Small enterprises:

Sl. No Parameter Benchmark
01 Debt Service Coverage May be accepted upto a minimum of 1,
Ratio (DSCR for both Micro & Small Enterprises, duly
justifying the same in the proposals
placed for decision.
02 Return On Capital Not applicable for Micro Enterprises. For
Employed (ROCE) Small Enterprises a minimum ROCE
equivalent to Bank’s 5 year Govt.
Security yield* may be considered
adequate.
03 Gap between Internal Need not be a benchmark for considering
Rate of Return (IRR) restructuring package.
and the cost of Capital
(COC)
04. Extent of sacrifice:

i. Sacrifice on the part of the Bank can be in the form of waivers, reduction in interest rates,
conversion of a portion or entire part of the advances into equity/ debentures or a
combination thereof. The extent of sacrifice would be estimated on the basis of net present
value of the sacrifice during the period for which the sacrifice is assumed to be operative.
(Details of computation as per Enclosure I)
ii. The extent of Bank's sacrifice amount computed on present value method would not
exceed 15% of the amount of restructured dues to the Bank.
b. Medium Enterprises:
Sl. No Parameter Benchmark
1 Debt Service Coverage Upto 1.20 in exceptional cases, may be
Ratio (DSCR accepted upto 1 with due justification.
2 Return On Capital Minimum ROCE equivalent upto 1%
Employed (ROCE) above the Bank’s 5 year Govt. Security
yield* may be considered adequate.
3 Gap between Internal Need not be a benchmark. However,
Rate of Return (IRR) reasonably acceptable level, on case to
and the cost of Capital case basis, may be decided by the
(COC) sanctioning authority with due reference
to financial viability of the Unit.
4. Gross Profit Margin Need not be a benchmark. However,
reasonably acceptable level, on case to
case basis, may be decided by the
sanctioning authority with due reference
to financial viability of the Unit and
industry information available with the
Bank.
* 5 year Govt. Security yield (G Sec) may be obtained from Integrated Treasury wing,
Mumbai.
P a g e | 66
5. Extent of sacrifice The sacrifice so computed on present value method will not be more
than 10% of the restructured amount due to the Bank.
6. Loan Life Ratio (LLR):
Loan Life Ratio is a concept which is used internationally in project financing activity. The
ratio is based on the Available Cash Flow (ACF) and present value principle.
LLR = Present value of Available Cash Flow during loan life period / Maximum amount of
Loan. The present value of available cash flow is arrived by discounting the annual cash
surplus (cash profit before interest) at a discount rate equal to weighted average cost of
borrowing, post restructuring. LLR can be used to arrive at the sustainable debt in a
restructuring exercise. A benchmark LLR of 1.25, which would give a sufficient cushion to
the amount of loan to be serviced, may be considered adequate
RELIEFS AND CONCESSIONS:
SMALL ENTERPRISES:
1. Re-phasement / Re-schedulement of Existing Term loans - Max 10 Years.

2. WCTL may be carved out based on DP as at the end of the month prior to cut off
date arrived at for restructuring and unduly overdue bills which is considered
unrecoverable may also be added and repaid in a period of 5 years.
3. FITL - Unrecovered interest on WC and TL to be repaid in 3 years.
4. Deferment of interest - Interest accruing for maximum of 6 months may be deferred
to be repaid within 3 years.
5. Fresh finance - can be considered to meet essential capital expenditure and WC by
way of term loan and WC limits. TL to be repaid within a period of 7 years.
6. Promoter’s contribution - Not less than 15% of Bank’ sacrifice to be brought.
LARGE AND MEDIUM ENTERPRISES:
1. Re-phasement / Re-schedulement of Existing Term loans - Max 7 - 10 Years.

2. WCTL may be carved out based on DP as at the end of the month prior to cut off date
arrived at for restructuring and unduly overdue bills which is considered
unrecoverable may also be added and repaid in a period of 7 years.
3. FITL - Unrecovered interest on WC and TL to be repaid in 3 years and in exceptional
cases, can be extended for 5 years.
4. Deferment of interest - Interest accruing for maximum of 6 months may be deferred
to be repaid within 2-3 years.
5. Fresh finance - can be considered to meet essential capital expenditure and WC by
way of term loan and WC limits. TL to be repaid within a period of 7 years.
6. Promoter’s contribution - Not less than 15% of Bank’ sacrifice to be brought.
7. Conversion into debentures/equity - Part of the outstanding. Principal and / or unpaid
interest may be converted as debentures/ equity
MICRO ENTERPRISES:
Existing loans can be rephrased with repayment in convenient instalment payable in next
five to 10 years.
WCTL/FITL – As applicable to Small Enterprises.
P a g e | 67

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What are the different categories of MSMEs based on investment?

What are the different categories of MSMEs based on investment?

What are the factors considered for restructuring of loans for medium enterprises?

What are the factors considered for restructuring of loans for medium enterprises?

CANARA BANK OFFICERS’ ASSOCIATION

PROMOTION STUDY MATERIAL - 2018

 The MSMEs engaged in manufacturing or production and providing or rendering of

Definition of the MSME Sector as per MSMED Act, 2006.

A. Direct Finance (Loans/advances granted directly to MSMEs):

Enterprise Manufacturing Services

Plant & Machinery / equipments to be considered as advances extended to Micro Enterprises

i) A copy of the invoice of the purchase of plant and machinery; or

Items to be included/excluded while calculating the original investment in P & M :

The investment in establishing of windmill/s to generate electricity for captive

Ministry of MSME, Govt. of India has also clarified as under:

i. Equipment such as tools, jigs, dyes, moulds and spare parts

B. Other Finance (MSME)

2) Loans to co-operatives of producers in the decentralized sector viz. artisans, village

3) Loans sanctioned by banks to MFIs for on-lending to MSME sector subject to

TARGET FOR LENDING TO MICRO, SMALL AND MEDIUM ENTERPRISES SECTOR:

CLASSIFICATION OF FINANCE TO MSME SECTOR (H O Cir 235/2015, 305/2016)

Loans/advances (both Fund & Non Fund Based)

a Micro and Small Enterprises (MSE) – Services (including Retail Non-Priority

Filing Of Memorandum By MSME Units (Cir 275/07, 212/2011, 579/15, 305/16)

 With the introduction of MSMED ACT, Filing of memorandum (Registration) is not

TIME NORMS FOR DISPOSAL OF MSME PROPOSALS: (HO Cir 533/2017)

 Provided such applications are complete in all respects.

SECURITY NORMS FOR MSME ADVANCES:

 In respect of loans/advances to Micro and Small Enterprises (including loans sanctioned

i. Upto Rs.10 lakhs (which is mandatory).

TAKE OVER NORMS FOR MSME ADVANCES

DELEGATION FOR TAKEOVER (MSME)

Takeover Compliance Chart

Sl.No Norms Compliance

5. In respect of take over of TL, the remaining repayment period shall

REJECTION OF CREDIT PROPOSALS UNDER MSME:

RISK RATING OF MSME ACCOUNTS: (H O Cir 493/2017)

Internal Rating Model Borrowal accounts with sanctioned/ proposed limit

PRESENT RATE OF INTEREST (185/2016 & 532/2016, 579/2017)

Overnight MCLR 7.85%

A) ROI ON LOANS AND ADVANCES UPTO Rs.2 LACS

Exposure Working Capital Term Loan

Exposure Working Capital Term Loan

B) EXPOSURE ABOVE Rs.2 LAKHS AND UPTO Rs.2 CRORES (BOTH

1) FOR EXPOSURE ABOVE RS.2 LAKHS UPTO RS.1 CRORES

Rating Grade ROI

2) FOR EXPOSURES ABOVE RS.1 CRORES UPTO RS.2 CRORES

(ROI linked to value of immovable property (freehold) mortgaged / approved collaterals

1. Concession of 0.25 % in applicable rate of interest in CGTMSE covered accounts upto an

BOTH MANUFACTURING / SERVICES (Other than NBFCs, Commercial Real Estate,

(II) EXTERNALLY UNRATED EXPOSURE ABOVE Rs.5 CRORE (RATED

*Exposure above Rs.5 Crore externally unrated, an additional interest of 0.25% pa

BOTH MANUFACTURING / SERVICES (Other than NBFCs, Commercial Real Estate,

Rating Grade ROI

Limit Upto 90 days Above 90 days upto 180

SI.No. Schemes Working Term Loan Other condition

13.Doctor’s Choice (MSME SERVICES):

Low Risk Normal Risk Moderate Risk

Low Risk Normal Risk Moderate Risk