The government’s Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which operates the credit guarantee scheme for MSEs, has clarified that informal micro enterprises (IMEs) registered on the Udyam Assist Platform (UAP) of the MSME Ministry are eligible for the loan guarantee under the special provision even without any declaration regarding exemption from Goods and Services Tax (GST).
IMEs are enterprises exempted from filing returns under the provisions of the CGST Act, 2017. In order to get them on the Udyam platform and provide access to priority sector lending benefits, the government in January last year introduced UAP for Udyam registration based on IMEs’ information with banks or non-banking financial companies (NBFCs).
In a circular to member lending institutions (MLIs) earlier this month, CGTMSE clarified that “MLIs are not required to submit declaration with regard to GST exemption in respect of the enterprises which have obtained Udyam Registration Number (URN) from Udyam Assist Platform of Ministry of MSME while applying for guarantee coverage.”
MLIs include public and private sector banks, regional rural banks, small finance banks, urban co-operative banks, microfinance institutions, etc.
CGTMSE further clarified that GST declaration is required to be submitted only in respect of enterprises which have obtained URN from the Udyam Registration Portal (URP) of the MSME Ministry.
In February this year, CGTMSE had introduced a special provision for IMEs under the credit guarantee scheme that allowed up to 85 per cent guarantee cover for loans up to Rs 20 lakh.
In May last year, the Reserve Bank of India (RBI) had informed all lenders to treat IMEs having Udyam certificate as micro enterprises for classification under the priority sector lending norms.
According to the data shared by CGTMSE earlier this year in a post on X (formerly Twitter), the credit guarantee scheme had approved Rs 2 lakh crore guarantees in FY24, the highest ever in a single FY vis-a-vis Rs 1.04 lakh crore guarantees across 11.65 lakh guarantees in FY23 and Rs 56,172 crore across 7.17 lakh guarantees in FY22.