I have availed a loan of 30 lacs under CGTSME scheme in 2005.My business has incurred losses as a result of which my factory has closed down.What are my liablities under CGTMSE scheme and what steps normally bank takes to recover the dues?
I would like to suggest you to search for the measures on internet. Please check have you been asked any guarantor for the loan or have you been asked any colateral security because it is strictly not advisable under the scheme. The Chamber (Credit Guarantee Trust), itself is your guarantor under this scheme. You do not have to provide any security or guarantor under this scheme. High Court even has ordered that the premium which is payable to the trust under this scheme is to paid by the creditor bank itself. The bank should not levy that burden on the borrower. This scheme is prepared only for SSI and such sectors. Hence go on and search the internet. If a borrower becomes defaulter the bank notifies the trust about the default and declares the unit as sick and the loan amount taken by the borrower is paid by the trust itself as it stands as a guarantor. There is also a provision to fund such sick units under this scheme by refinancing them to develop the sick business. Banks do not at all consider such process. Unfortunately banks undergo with there normal recovery procedure by harassing the borrowers covered under this scheme. Which is not legal. They never try to refinance a sick unit. I am not confirmed whether a borrower can directly approach the chamber or trust and notify them about all this. If you are in Maharashtra then our SSI or MSME sector chairman now is Mr. Vilasrao Deshmukh. I would also suggest you to go through an article that was published in the DNA newspaper on 14th June 2012. I hope you will get some relief by reading that article. Gujrat and Karnataka are working strongly to build strong SME base in their respective states. Just go on with reading and you will surely get an answer. Please dont neglect this.