BTL 878 - CGTMSE - Modification in CGS – TPG

 

The Banking Tutor’s Lessons

BTL 878                                                                                12-03-2026

CGTMSE - Modification in CGS – TPG

As per extant guidelines of CGTMSE, "Third Party Guarantee" means any guarantee obtained by a Member Lending Institution in connection with a credit facility extended by it to a firm which is referred as Borrower except from:

(a) a Sole-Proprietor in the case of a Sole Proprietary concern;

(b) Partners in the case of a Partnership or Limited Liability Partnership (LLP) 

(c) Trustees in the case of a Trust;

(d) Karta and Coparceners in the case of a Hindu Undivided Family (HUF);

(e) Promoter Directors in the case of a Private or Public Limited Company; or

(f) the owner of the collateral security (under a hybrid or partial collateral security model. 

Now CGTMSE, vide Circular dated 10^th February 2026 advised revised definition of TPG related to CGS as under.

The personal guarantee of following shall not be treated as a Third Party  Guarantee.

(a) a sole proprietor or individual as co-borrower or co- obligant;

(b) partners of the coborrower or co- obligant partnership or LLP;

(c) trustees of the co-borrower or co- obligant trust;

(d) Karta and Coparceners of the co-borrower or co- obligant HUF or

(e) promoter directors of the co-borrower or co- obligant company

If you see the above paras, you may find only one difference. Only para f –“the owner of the collateral security in the case of a guarantee under a hybrid or partial collateral security model” is omitted in revised definition.

From the above it is understood that “Any person not related to the Business is a Third Party”.

Sekhar Pariti

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