CGTMSE Empowers 76 Lakh MSEs With INR 5 Lakh Crore Cumulative Loan Guarantee

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) has approved a cumulative guarantee of INR 5 lakh crore, benefiting 76 lakh MSEs, according to the Ministry of Micro, Small and Medium Enterprises (MSME).

“Congratulations to CGTMSE Officials for reaching the remarkable milestone of approving Cumulative Guarantees of INR 5 lakh crore, empowering 76 lakh MSEs. Under the leadership of Prime Minister Narendra Modi, we are committed to supporting the growth of these enterprises as we work towards the goal of a USD 5 trillion economy,” wrote Union MSME Minister Narayan Rane in his Facebook post.

Launched in July 2000 with an initial investment of INR 2,500 crore from the Centre and the Small Industries Development Bank of India (SIDBI), CGTMSE's corpus was subsequently increased to INR 7,500 crore, with an additional INR 5,000 crore contributed by the government.

Notably, in this year's budget, Finance Minister Nirmala Sitharaman announced an infusion of INR 9,000 crore into the CGTMSE corpus, effective April 1, 2023. This infusion was aimed at facilitating an additional collateral-free credit of INR 2 lakh crore to MSMEs while reducing the cost of credit by 1 per cent.

According to CGTMSE platform data, during FY23, the scheme approved 11.65 lakh guarantees amounting to INR 1.04 lakh crore. Data shared in Parliament by the Minister of State for MSMEs Bhanu Pratap Singh Verma earlier this year indicated that 8.35 lakh guarantees, totaling INR 36,899 crore, were approved in FY21, followed by 7.17 lakh guarantees involving INR 56,171 crore approved in FY22.

The CGTMSE scheme offers MSEs a maximum credit guarantee of 85 per cent for loans up to INR 5 lakh and 75 per cent for loans ranging from INR 5 lakh to INR 5 crore. Moreover, specific categories of entrepreneurs, including women entrepreneurs, SC/ST entrepreneurs, MSEs in aspirational districts, ZED-certified MSEs, persons with disabilities (PwD), and MSEs promoted by Agniveer, benefit from an 85 per cent guarantee limit for loans up to INR 5 crore, according to the scheme's details.

CGTMSE boasts a diverse membership of over 150 lending institutions, including public sector units, private banks, micro-financing institutions, regional rural banks (RRBs), foreign banks, NBFCs, and other financial institutions.

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

Aimed at providing support to first-generation entrepreneurs, CGTMSE is a joint initiative by Ministry of Micro, Small & Medium Enterprises (MSME), and Small Industries Development Bank of India (SIDBI) to improve flow of institutional credit to micro and small enterprises (MSEs). CGTMSE has been instrumental in providing guarantee cover to collateral and/or third party guarantee free credit facilities extended by eligible Member Lending Institution [MLIs] to MSEs. The credit guarantee scheme was allocated a fund of INR 9,000 crore during the union budget.

Collateral-free credit (fund and non-fund-based) extended by eligible financial institutions to new and existing MSEs, up to a limit of INR 5 crore, is eligible to be covered by the lending institution.