Credit Guarantee Fund Trust for Micro and Small Enterprises -
Credit Guarantee Scheme
Introduction
The Ministry of Micro, Small and Medium Enterprises, Govt. of India, (the then Ministry of SSI) and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Small Industry (CGTSI) which has been recently renamed as Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Scheme (CGS). CGS was launched to make available collateral and third party guarantee free credit to the small-scale industries (SSIs) and Small Scale Service and Business Enterprises (Industry Related) [SSSBE-IR]. As per the announcement of “Package for Promotion of Micro and Small Enterprises” in Parliament by Hon’ble Minister for MSME, Govt. of India on February 27, 2007, its scope was widened to include Micro and Small Enterprises sector and the scheme has been renamed as “Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS)”. Both existing and new units are eligible to be covered under the scheme.
First generation entrepreneurs in the Micro and Small Enterprises (MSE) sector find it difficult to access credit from the organized banking sector. The banks on their part are concerned about the likely defaults in small loans and hence try to collateralize their exposure to the small borrowers. Keeping this in mind it was thought fit to create the instrument of Credit Guarantee to enhance the comfort level of the banks for financing loans, as well as a new gateway for MSE entrepreneurs to get funding without collateral security and / or third party guarantee.
The corpus of CGTMSE is being contributed by Settlors i.e. the Government of India and SIDBI in the proportion of 4:1, respectively. The committed corpus of CGTMSE is Rs.2500 crore.
Eligible Lending Institutions
The institutions, which are eligible under the...