Scribd Logo
Upload

Welcome to Scribd!

  • 17 views

    Intimate The Trust Before Entering Into Any Compromise or Arrangement

    Uploaded by

    Harsh Mehta
    The document is a circular from CGTSI informing Member Lending Institutions of modifications to Clause 7(vii) of the Credit Guarantee Scheme. Specifically, it relaxes two requirements: 1) MLIs no longer need prior permission from CGTSI before entering compromise agreements or arrangements with borrowers, they just need to inform CGTSI; and 2) MLIs no longer need prior written approval from CGTSI before creating charges on borrower security, they just need to inform CGTSI. These modifications give MLIs more flexibility in working with borrowers covered under the Credit Guarantee Scheme while still safeguarding CGTSI's interests as the guarantor. The changes come into effect on April 1,

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd

    Intimate The Trust Before Entering Into Any Compromise or Arrangement

    Uploaded by

    Harsh Mehta
    17 views2 pages
    The document is a circular from CGTSI informing Member Lending Institutions of modifications to Clause 7(vii) of the Credit Guarantee Scheme. Specifically, it relaxes two requirements: 1) MLIs no longer need prior permission from CGTSI before entering compromise agreements or arrangements with borrowers, they just need to inform CGTSI; and 2) MLIs no longer need prior written approval from CGTSI before creating charges on borrower security, they just need to inform CGTSI. These modifications give MLIs more flexibility in working with borrowers covered under the Credit Guarantee Scheme while still safeguarding CGTSI's interests as the guarantor. The changes come into effect on April 1,

    Original Title

    CIRC 23.doc

    Copyright

    © © All Rights Reserved

    Available Formats

    DOC, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document is a circular from CGTSI informing Member Lending Institutions of modifications to Clause 7(vii) of the Credit Guarantee Scheme. Specifically, it relaxes two requirements: 1) MLIs no longer need prior permission from CGTSI before entering compromise agreements or arrangements with borrowers, they just need to inform CGTSI; and 2) MLIs no longer need prior written approval from CGTSI before creating charges on borrower security, they just need to inform CGTSI. These modifications give MLIs more flexibility in working with borrowers covered under the Credit Guarantee Scheme while still safeguarding CGTSI's interests as the guarantor. The changes come into effect on April 1,

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    17 views2 pages

    Intimate The Trust Before Entering Into Any Compromise or Arrangement

    Uploaded by

    Harsh Mehta
    The document is a circular from CGTSI informing Member Lending Institutions of modifications to Clause 7(vii) of the Credit Guarantee Scheme. Specifically, it relaxes two requirements: 1) MLIs no longer need prior permission from CGTSI before entering compromise agreements or arrangements with borrowers, they just need to inform CGTSI; and 2) MLIs no longer need prior written approval from CGTSI before creating charges on borrower security, they just need to inform CGTSI. These modifications give MLIs more flexibility in working with borrowers covered under the Credit Guarantee Scheme while still safeguarding CGTSI's interests as the guarantor. The changes come into effect on April 1,

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    You are on page 1of 2

    CGTSI/(44)/2297

    March 22, 2005

    All the Member Lending Institutions (MLIs) of CGTSI


    Circular No. 23 /2004-05
    Dear Sir,
    Modifications in the Credit Guarantee Fund
    Scheme for Small Industries (CGS)
    CGTSI has been receiving suggestions from its MLIs, regarding relaxation /
    modifications in Clause 7(vii) of the Credit Guarantee Scheme with respect to the following:
    (i)
    (ii)

    Member Lending Institution (MLI) to obtain prior permission of CGTSI before entering
    into any compromise or arrangement with the borrower covered under CGS and
    MLI to obtain prior written approval of the Trust before creating any charge on the
    security of the borrower covered under CGS.

    The present Clause 7 (vii) under Chapter II Scope and Extent of the Scheme of the
    Credit Guarantee Scheme, states as under :
    The lending institution shall, in respect of any guaranteed account, exercise the
    same diligence in recovering the dues, and safeguarding the interest of the Trust
    in all the ways open to it as it might have exercised in the normal course if no
    guarantee had been furnished by the Trust. The lending institution shall, in
    particular, refrain from any act of omission or commission, either prior to or
    subsequent to invocation of guarantee, which may adversely affect the interest of
    the Trust as the guarantor. In particular, the lending institution should
    obtain prior permission of the Trust before entering into any compromise
    or arrangement, which may have the effect of discharge or waiver of
    personal guarantee(s) or security. The lending institution shall also ensure
    either through a stipulation in an agreement with the borrower or otherwise, that
    he shall not create any charge on the security held in the account
    covered by the guarantee for the benefit of any account not covered by
    the guarantee, with itself or in favour of any other creditor(s) without
    the prior written approval of the Trust. Further the lending institution shall
    secure for the Trust or its appointed agency, through a stipulation in an
    agreement with the borrower or otherwise, the right to list the defaulted
    borrowers names and particulars on the Website of the Trust.
    With a view to giving flexibility to MLIs in exercising arrangements with respect to one
    time settlement and creating any charge on the security of the borrower covered under CGS,
    the Clause 7 (vii) under Chapter II Scope and Extent of the Scheme of the Credit Guarantee
    Scheme has been modified as under :
    The lending institution shall, in respect of any guaranteed account, exercise
    the same diligence in recovering the dues, and safeguarding the interest of the
    Trust in all the ways open to it as it might have exercised in the normal course
    if no guarantee had been furnished by the Trust. The lending institution shall,
    in particular, refrain from any act of omission or commission, either prior to or
    subsequent to invocation of guarantee, which may adversely affect the interest
    of the Trust as the guarantor. In particular, the lending institution should
    intimate the Trust before entering into any compromise or arrangement

    which may have the effect of discharge or waiver of personal


    guarantee(s) or security. The lending institution shall also ensure either
    through a stipulation in an agreement with the borrower or otherwise, that it
    shall not create any charge on the security held in the account covered
    by the guarantee for the benefit of any account not covered by the
    guarantee, with itself or in favour of any other creditor(s) without
    intimating the Trust. Further the lending institution shall secure for the Trust
    or its appointed agency, through a stipulation in an agreement with the
    borrower or otherwise, the right to list the defaulted borrowers names and
    particulars on the Website of the Trust.
    The above modification shall come into effect from April 01, 2005.
    Please feel free to get in touch with us in case any further clarifications are required.
    Thanking you,
    Yours faithfully,
    Sd/(S N Sadhwani)
    Dy. General Manager

    You might also like