Realizing the fact that credit remains a major challenge for MSMEs. Ministry of MSME has decided to give a fresh push to Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). Minister of State (I/C) for MSME Ministry, Giriraj Singh informed about government’s latest strategy and action plan towards CGTMSE in order to improvise the situation of credit availability and lending for MSMEs.
Mr. Singh further informed that corpus for CGTMSE has been increased as a major step towards handholding the MSMEs with regards giving them financial support in the country. The increased corpus amount from 2,500 crores to 7,500 Crores is a step which is expected to add great value to the country’s MSME ecosystem, shared Mr Giriraj Singh.
“Next to the agriculture sector in the country, the MSMEs is the priority of the present government”, the Minister said.
During the event the key changes, along with a new logo of the trust, several key changes in the CGTMSE were unveiled.
Under the changed rule, loans with Partial Collateral Security have been allowed under CGS.
“This apart from bringing a large chunk of loans under the ambit of credit guarantee would also help in promoting disciplined credit behaviour,” said an official release.
It has also been decided to increase the extent of guarantee coverage for proposals above Rs 50 lakh.
New Product for NBFCs has been introduced in order to enable them to avail loan guarantees under the credit guarantee scheme.
It has also been announced to enhance the IT infrastructure of the Trust to improve operational efficiencies and reduce turnaround time for claim settlement.
Further, under the Rebooted CGTMSE, the Trust is embedding risk management tools within the scheme.
The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) was launched by the Government of India (GoI) to make available collateral-free credit to the micro and small enterprise sector.
Both the existing and the new enterprises are eligible to be covered under the scheme.
MoMSME and SIDBI established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises.
The scheme was formally launched on August 30, 2000. The corpus of CGTMSE is being contributed by the GoI and SIDBI in the ratio of 4:1 respectively and has contributed Rs. 2477.78 crore to the corpus of the Trust up to May 31, 2016. As announced in the Package for MSEs, the corpus was to be raised to Rs.2500 crore by the end of 11th Plan.