Collateral-free loans to MSEs under CGTMSE: The government’s Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which provides guarantee cover to financial institutions for loans to eligible micro and small enterprise (MSE) borrowers, has approved cumulative guarantee of Rs 5 lakh crore so far, according to the MSME Ministry. The number of MSEs supported were 76 lakh.
“CGTMSE achieves yet another milestone of approving Cumulative Guarantee of INR 5 lakh Crore backing 76 lakh MSEs,” the ministry posted on X (formerly Twitter) last week.
Introduced back in July 2000 with an initial outlay of Rs 2,500 crore from the government and Small Industries Development Bank of India (SIDBI), CGTMSE’s corpus was enhanced to Rs 7,500 crore with an additional Rs 5,000 crore contributed by the government of India later.
Importantly, finance minister Nirmala Sitharaman in this year’s budget had announced infusion of Rs 9,000 crore in the CGTMSE corpus, effective April 1, 2023, to enable additional collateral-free credit of Rs 2 lakh crore to MSMEs while the cost of credit will be reduced by 1 per cent.
According to the data available on the CGTMSE platform, the scheme had approved 11.65 lakh guarantees amounting to Rs 1.04 lakh crores during FY23. As per data shared in the Parliament by the minister of state for MSMEs Bhanu Pratap Singh Verma earlier this year, 8.35 lakh guarantees amounting to Rs 36,899 crore were approved in FY21 followed by 7.17 lakh guarantees involving Rs 56,171 crore approved in FY22.
The scheme offers MSEs a maximum credit guarantee of 85 per cent for loans up to Rs 5 lakh and 75 per cent for loans ranging from Rs 5 lakh to Rs 5 crore. For women entrepreneurs/SC/ST entrepreneurs/MSEs situated in aspirational districts ZED-certified MSEs/person with a disability (PwD)/MSE promoted by Agniveer, the guarantee limit is 85 per cent for loans up to Rs 5 crore, according to the scheme’s details
CGTMSE has more than 150 member lending institutions, including public sector units, private banks, microfinancing institutions, regional rural banks, foreign banks, NBFCs, and other financial institutions.