Budget 2025: Finance Minister Nirmala Sitharaman in her budget speech on Saturday announced increasing credit guarantee cover under the CGTMSE scheme for MSMEs and startups to ease their access to formal credit. For micro and small enterprises, the cover has been enhanced from the current Rs 5 crore to Rs 10 crore leading to an additional credit of Rs 1.5 lakh crore in the next five years.  

For startups, the cover has been increased from the current Rs 10 crore to Rs 20 crore while reducing the guarantee fee to 1 per cent for loans in 27 focus sectors. 

Also, for well-run exporter MSMEs, the cover will be provided for term loans up to Rs 20 crore. 

FM Sitharaman also announced that customised credit cards for micro enterprises registered on the Udyam portal will be introduced with Rs 5 lakh limit. The minister said 10 lakh cards will be issued in the first year.  

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The CGTMSE scheme, which provides guarantees to banks for collateral-free loans to micro and small enterprises (MSEs), had achieved the 1 crore guarantee mark in December last year.  

The fund, launched in 2000, currently enables collateral-free loans up to a limit of Rs 5 crore to MSEs with guarantee coverage up to 85 per cent for various categories of loans under the credit guarantee scheme.   

Importantly, the credit guarantee amount approved had doubled in FY24 to Rs 2 lakh crore, the highest ever in a single FY vis-a-vis Rs 1.04 lakh crore in FY23 and Rs 56,172 crore in FY22.  

In September, MSME Minister Jitan Ram Manjhi had announced an increase in CGTMSE guarantee coverage for women-owned MSEs to 90 per cent, targeting 27 lakh women beneficiaries.

Sitharaman, on Saturday, had also revised the MSME definition to bring enterprises with turnover up to Rs 500 crore under the MSME ambit from the current Rs 250 crore. The minister said the investment limit for MSME classification will be made 2.5 times while turnover limits for MSME classification will be doubled.