CGTMSE Guarantee Fee Debit on MSME Loan: How to Reconcile

A guarantee-fee debit on an MSME loan is usually the annual guarantee fee (AGF) your bank pays to CGTMSE (or another guarantee trust) and recovers from you. You can reconcile it in three checks: the rate slab for your loan size, the amount it was charged on (guaranteed amount in year one, outstanding amount after that, pro-rated to 31 March), and whether your sanction letter and Key Facts Statement disclose that the fee is passed on to you. Rates below are CGTMSE's standard rates for guarantees approved or renewed from 1 April 2025, as of November 2026.

For how the guarantee itself works, see our guide to CGTMSE collateral-free loans. This page is about checking the debit.

Why the fee appears on your statement

• The guarantee protects the lender, not you. The lender pays the fee to keep the cover alive.
• CGTMSE leaves it to the lender's discretion whether to recover the fee from the borrower. Most do, through a direct debit to your current or CC account.
• The guarantee is renewed every year, so the debit recurs annually until the loan is closed or the cover ends.
• Other schemes have their own guarantee fees: Mudra loans are often covered by a guarantee fund run by NCGTC, and startup loans under CGSS carry a separate fee. Under PM Vishwakarma and PM SVANidhi, the government pays the guarantee fee.

The CGTMSE rate slabs

Your lender's actual rate can differ from the standard rate:

• Lender discount or premium: lenders with a good claims record get 10% off the standard rate; others pay a risk premium of 15% to 70% over it. This depends on the lender, not on you.
• Borrower discounts: women, SC/ST, persons with disability and some other categories get a 10% discount, with further discounts for certain regions and ZED-certified units, up to a combined cap.
• GST: check whether your debit is a single amount or the fee plus GST shown separately; ask the bank for the break-up.

How the amount is calculated

CGTMSE's published rules work like this:

1. First year: the fee is calculated for one full year, generally on the guaranteed amount (for a term loan that is not fully disbursed, on the guarantee amount).
2. Second payment: pro-rated for the number of days from the end of the first year to 31 March, on the outstanding amount, using a 365-day year.
3. Later years: a full year's fee each financial year on the outstanding amount; the final year is pro-rated.
4. Working capital: the lender may update an "expected maximum outstanding" figure for the year. If it does not, the fee may be charged on the previous year's outstanding or the guaranteed amount. This is why CC borrowers sometimes see a fee on more than they actually used.

Worked example: a ₹25 lakh term loan

A small manufacturer gets a ₹25 lakh term loan under CGTMSE, guarantee effective 15 July 2026, at the standard 0.55% rate. All balances are illustrative.

Now compare with what the bank actually debited:

• Debit of ₹16,225 in year 1: that is ₹13,750 × 1.18, so ask whether 18% GST was added on top.
• Debit of ₹15,750: that is 0.63%, the standard rate plus a 15% risk premium. Ask the bank which rate band applies to it.
• Woman-owned unit: with a 10% borrower discount, the rate becomes 0.495% (CGTMSE's table rounds this to 0.50%), so year 1 should be about ₹12,375 to ₹12,500, not ₹13,750.
• Two debits in one year: check whether one is a pro-rata catch-up and the other the next year's fee. If not, ask for a reversal.

To see how the fee adds to your total borrowing cost, run the loan in the EMI calculator and add the yearly fees to the interest.

Records to keep

• Sanction letter and Key Facts Statement (look for the guarantee fee clause)
• Your CGPAN (the guarantee reference number) from the bank
• Every fee debit advice and the loan statement showing outstanding balances on 31 March
• Correspondence on rate band, discounts and GST
• Category proof (women, SC/ST, PwD) if you expect a discount

What to ask the bank

Send a short written request to your branch:

I see a debit of ₹[amount] on [date] described as a CGTMSE/guarantee fee on loan account [number]. Please share: (1) the CGPAN, (2) the period covered, (3) the base amount and rate used, (4) any discount or risk premium applied, (5) GST included, and (6) the clause in my sanction letter or KFS that allows recovery of this fee.

Common mismatches and fixes

Claiming a state reimbursement

Several state MSME policies reimburse the guarantee fee. Gujarat's scheme, for example, reimburses 100% of the annual guarantee fee on collateral-free term loans for five years for eligible micro and small manufacturing units; see Gujarat MSME interest subsidy. These claims usually need the bank's certificate of fee paid for each year, so collect it every April.

How to escalate

1. Branch manager, with your written query and statement extracts.
2. The bank's grievance redressal or nodal officer.
3. If unresolved after 30 days, or if the reply is unsatisfactory, the RBI Integrated Ombudsman at cms.rbi.org.in. Complaints about undisclosed charges or wrong debits are within its scope for banks and most NBFCs.

Key takeaways

• The guarantee-fee debit is usually CGTMSE's annual fee, which lenders may pass on to you each year.
• Year one is generally on the guaranteed amount; the next payment is pro-rated to 31 March on the outstanding; later years are full-year on the outstanding.
• In the ₹25 lakh example the fees were ₹13,750, ₹8,023 and ₹9,350; compare such figures with your debits.
• Rate differences usually come from the lender's discount or premium, borrower-category discounts or GST.
• Ask for the CGPAN, base, rate and KFS clause in writing, and escalate to cms.rbi.org.in if unresolved after 30 days.