CGTMSE: Scheme Details, Fee, Loan Eligibility | The Financial Express

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CGTMSE Scheme, CGTMSE scheme, Eligibility


The government’s Credit Guarantee Fund for Micro and Small Enterprises (CGTMSE) is among the biggest and most prominent initiatives taken to provide micro and small enterprises (MSEs) with collateral-free loans. Introduced back in July 2000 with an initial outlay of Rs 2,500 crore from the government and the Small Industries Development Bank of India (SIDBI), the scheme was later strengthened with an additional Rs 5,000 crore.

To further boost the scheme’s coverage, finance minister Nirmala Sitharaman in her budget speech this year had announced an infusion of another Rs 9,000 crore in the CGTMSE corpus, effective April 1, 2023.

Here’s the latest on the scheme and how it can benefit MSE borrowers:

Who can raise credit under CGTMSE?

All new and existing MSEs in manufacturing or service activity excluding agriculture, and self-help groups (SHGs) can seek loans with CGTMSE cover.

Also read: CGTMSE: Nearly 8.50 lakh loan guarantees approved for micro, small units in FY23 till December

Can a borrower raise credit under CGTMSE from more than one lender? 

A loan can be raised by more than one bank and/or financial institution jointly and/or separately up to Rs 5 crore subject to the ceiling amount of individual lender. 

What is the limit of guarantee cover on loans raised under CGTMSE?

For loans up to Rs 5 lakh, the guarantee cover available for micro enterprises is up to 85 per cent, for loans between Rs 5 lakh and Rs 5 crore, the cover is up to Rs 75 per cent. For women entrepreneurs/ SC-ST entrepreneurs/ MSEs situated in aspirational districts/ ZED-certified MSEs, etc., the guarantee cover available is up to 85 per cent for loans up to Rs 5 crore. For MSEs based Northeast region, Jammu & Kashmir and Ladakh, the cover limit is up to 80 per cent for loans up to Rs 50 lakh and up to 75 per cent for loans between Rs 50 lakh and Rs 5 crore. 

Can a borrower raise a loan from a microfinance institution and seek CGTMSE cover?

Yes, the scheme had added microfinance institutions (MFIs) last year to the list of member lending institutions (MLIs). MFIs joined public and private banks, regional rural banks, foreign banks, small finance banks, urban cooperative banks, and other MLIs in lending to new enterprises with credit guarantee cover.

Also read: CGTMSE: How collateral-free loan scheme doubled in loan amount guaranteed from pre-Covid level

Is the Udyam registration mandatory for CGTMSE loans? 

MSEs seeking guarantee cover under CGTMSE for the collateral-free credit will have to provide their Udyam registration number. It was made mandatory from January 16 2023, according to the official circular by CGTMSE last year in November.

What are the documents required while applying for a CGTMSE loan with a lender? 

CGTME loan application along with passport-size photos, business project report, business registration certificate, CGTMSE loan coverage letter, and loan approval copy from the bank. 

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