BoB in pact with trust for risk sharing facility scheme

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Mumbai, November 21:: Bank of Baroda and Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), have signed a memorandum of understanding to implement a risk sharing facility scheme for micro and small enterprises.

The scheme of risk sharing facility, a part of the World Bank line of credit, envisages providing collateral free credit facilities to micro and small enterprises up to Rs 1 crore.

CGTMSE has earmarked Rs 25 crore for implementation of the scheme on a pilot basis and BoB is the eighth member lending institution to sign the MoU with CGTMSE for the purpose, a release said here today.

Similar MoUs had been signed with PNB, SIDBI, Canara Bank, BoI, United Bank of India, Union Bank and State Bank of India, it said.

CGTMSE Chief Executive O S Vinod said the new facility of higher guarantee coverage up to Rs 1 crore was in line with the industry demand for coverage of large-ticket credit facilities.

The credit guarantee scheme, while being beneficial to entrepreneurs in the MSE sector, would also be helpful to banks from the point of view of risk mitigation, more so with requirement of higher risk weights/provisioning, Vinod said.