CGTMSE Scheme

About

The Ministry of MSME started the Credit Guarantee Scheme for Micro & Small Enterprises (MSEs) on August 30, 2000, and it became operational from 1st January 2000.

Aim

Credit Guarantee Scheme aims to facilitate access to credit for the unserved and under-served MSE segment of the MSME Sector, making the availability of credit from conventional lenders to new-generation entrepreneurs and under-privileged who lack supporting their loan proposals with collateral security and/or third-party guarantee.

Implementation

To implement the Credit Guarantee Scheme, the Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) was set up by the Ministry of MSME, GoI and SIDBI.

Eligible borrowers

All Existing and New Micro and Small Enterprises (MSEs)

Credit support

With effect from 01.04.2023, this scheme facilitates collateral-free credit support of up to Rs. 5 crore to MSEs, extended by the CGTMSE’s Member Lending Institutions.

Special Credit guarantees

Small and Micro-Enterprises owned and/or operated by Women Entrepreneurs are eligible for a Guarantee Cover of 80%, whereas all the credit/loans in the North East Region (NER) for credit facilities are eligible for a guarantee of Rs. 50 lakh.

Lending Institutions offering funds under the CGTSME Scheme

● Scheduled Commercial Banks (SCBs)

●Regional Rural Banks (RRBs)

●Small Finance Banks (SFBs)

●Non-banking Financial Companies (NBFCs)

●Small Industrial Development Bank of India (SIDBI)

●National Small Industries Corporation (NSIC)

●North Eastern Development Finance Corporation Ltd. (NEDFi)

In default cases

In cases where there is a default, the trust settles the claim up to 75% (85%/80% wherever applicable) of the amount in default of the credit facility extended by the lending institution.

PRACTICE QUESTION

Q.Consider the following statements regarding the “Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme”:

1. It is a scheme for Micro and Small Enterprises under the Ministry of Corporate affairs.
2. The Scheme aims to facilitate access to credit for un-served and under-served MSE segments of MSME Sector.
3. The scheme provides collateral free credit support of upto Rs. 5 crore to MSEs, extended by the CGTMSE’s Member Lending Institutions

How many of the above statements is/are correct?

A. Only one

B. Only two

C. All Three

D. None

Answer: B

Explanation:

Statement 1 is incorrect:

●The Ministry of MSME started the Credit Guarantee Scheme for Micro & Small Enterprises (MSEs) on August 30, 2000, and it became operational from 1st January 2000

Statement 2 is correct:

●Credit Guarantee Scheme aims to facilitate access to credit for un-served and under-served MSE segment of MSME Sector, making availability of credit from conventional lenders to new generation entrepreneurs and under-privileged that lack supporting their loan proposal with collateral security and/or third party guarantee.

Statement 3 is correct:

●With effect from 01.04.2023, this scheme facilitates collateral free credit support of upto Rs. 5 crore to MSEs, extended by the CGTMSE’s Member Lending Institutions.