Credit and finance for MSMEs: The amount involved in guarantees provided to bank loans till November in the current fiscal under the Credit Guarantee Scheme (CGS), which facilitates collateral-free credit flow to micro and small enterprises (MSEs) under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), has surpassed the entire FY22 guarantee amount. According to the data exclusively shared with FE Aspire by SIDBI, which jointly set up CGTMSE with the MSME Ministry, the scheme approved guarantees worth Rs 60,377 crore during the first eight months (April-November) of FY23 in comparison to the Rs 56,172 crore guarantee approved in the entire FY22. “This indicates a very handsome growth for CGTMSE,” Sandeep Varma, Chief Executive Officer, CGTMSE told FE Aspire.
In a year-on-year (YoY) comparison, the guarantee amount approved till November in the current fiscal was 88 per cent more than Rs 32,088-crore worth guarantees approved till November FY22. The FY23 target for SIDBI is to approve guarantees worth Rs 75,000 crore. “The target we have this year is Rs 75,000 crore, up from Rs 56,000 crore last fiscal which we achieved. However, we also have in sight the Rs 1-lakh-crore mark,” Varma said.
In terms of the number of guarantees approved, CGTMSE recorded 53.7 per cent YoY growth from 4,60,531 as of November last fiscal to 7,07,837 till November in the current fiscal. The guarantees approved in FY22 stood at 7,17,020.
CGTMSE was set up in July 2000 with an initial outlay of Rs 2,500 crore which was increased to Rs 7,500 crore with an additional Rs 5,000 crore contributed by the government of India later. CGTMSE offers guarantees to bank loans of up to Rs 2 crore to MSEs.
Varma said even in terms of the guarantee amount settled, the scheme registered 66 per cent YoY growth from Rs 600 crore till November in FY22 to Rs 1,000 crore till November in the current fiscal while the total amount settled in the whole FY22 stood at Rs 1,300 crore.
The growth comes amid the government’s enhanced push for small businesses to register on the Udyam registration portal and become part of the formal economy. According to a circular ‘Udyam Registration Number Mandatory for Guarantee Coverage’ sent by CGTMSE to all member lending institutions (MLIs) under the CGTMSE scheme on October 17, MSEs seeking CGTMSE guarantee cover will have to provide their Udyam registration number (URN) effective from January 16, 2023.