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Cluster Financing

Standard Operational Guidelines – Cluster Based Finance

Objective

To frame cluster based schemes for providing assistance to a pool of borrowers engaged in common business activity in a particular geographical area.

Identification of Cluster

  • To be identified as per potential available in the cluster.
  • Minimum 30 units should be active within the cluster.
  • A Cluster may be defined as a geographical area within a range of say 200 km to 250 km.
  • All the units in the cluster should have proper backward/forward integration/linkages
  • Cluster identified by UNIDO ,Ministry of MSME

Purpose of Finance

For meeting the Fund Based (Working Capital / Term Loan) and Non fund based (BG/LC) Requirements of units/borrowers in a particular cluster.

Nature of Facility

Working Capital, Term Loan and NFB (LC/BG ) limits

Quantum of Finance

The quantum of finance to an individual borrower in a specific cluster should be need based and to be assessed as per requirement of business.

Eligibility criterion for individual borrowers under cluster

  • All business entities engaged in manufacturing /services and should be classified under MSME, as per MSMED act.
  • All business entities should have valid GST Registration, wherever it is applicable.

Security criterion for individual borrowers

CGTMSE covered accounts:

  • CGTMSE coverage should be obtained in all eligible accounts.
  • Coverage under Hybrid Security Product of CGTMSE to be encouraged.
 

Non CGTMSE Covered accounts

  • For Working Capital :Minimum CCR: 0.65
  • For Term Loan /Composite Loan: Minimum FACR:1.00