CGT-MSE Scheme
The Government of India has introduced a major benefit for small and micro-business sectors by offering access to credit without requiring collateral. This initiative ensures crucial funding for enterprises in these sectors, including both established businesses and new ventures. Providing bank credit without the complexities of collaterals or thirdparty guarantees can greatly support first-generation entrepreneurs in achieving their goal of establishing their own Micro and Small Enterprise (MSE).
To ensure the successful execution of this Credit Guarantee Scheme for all Micro and Small Enterprises, the Government of India has collaborated with SIDBI (Small Industries Development Bank of India) and the Ministry of Micro, Small, and Medium Enterprises to establish a trust named The Credit Guarantee Trust Fund Scheme.
Credit Guarantee Scheme for Banks (CGS-I)
The Credit Guarantee Fund Trust for Micro and Small Enterprises covers credit facilities provided by Member Lending
Institutions to single eligible borrowers in the Micro and Small Enterprises sector.
The coverage includes:
- Fund based and/or non-fund-based credit facilities.
- For Public Sector Banks, Private Sector Banks, Foreign Banks, and select Financial Institutions, the credit facility limit is up to ₹500 lakh.
- For Small Finance Banks (SFBs), Regional Rural Banks, State Financial Institutions, and Scheduled Urban Co-operative Banks (including Non-Scheduled Urban Co-operative Banks, State Co-operative Banks, and District Central Co-operative Banks), the limit is up to ₹200 lakh.
- For Microfinance Institutions, the limit is up to ₹50 lakh.
- These credit facilities can be in the form of term loans and/or working capital facilities.
- For credit extended by more than one bank and/or financial institution jointly and/or separately to eligible borrower, the maximum limit of ₹500 lakh per borrower.
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Slab
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Standard Rate (SR)*
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Fee Rate after Discount
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Free Rate with Risk Premium
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*AGF will be charged on the guaranteed amount for the first year and on the outstanding amount for the remaining tenure of the credit facility. The Standard rate is across all activity including trading activity.
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Category
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Social Category (Weaker Section/ Undeserved Section)
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Geographic
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MSE Status
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Credit Guarantee Scheme for NBFC’s (CGS-II)
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), had framed a Scheme for the purpose of providing
guarantees in respect of credit facilities extended by eligible NBFCs to borrowers in Micro and Small Enterprises (MSEs).
The coverage includes:
- Fund based and/or non-fund-based credit facilities.
- For Member Lending Institutions (MLIs), the credit facility limit is up to ₹200 lakh.
- For MSE Retail Trade, the limit is up to ₹100 lakh.
- These credit facilities can be in the form of term loans and/or working capital facilities
- For credit facilities extended by multiple NBFCs, banks, or financial institutions to the same borrower, the maximum limit is ₹200 lakh.
Credit Guarantee Scheme for Co-Lending (CGSCL)
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), had framed a Scheme for the purpose of providing
guarantees in respect of credit facilities extended by pair of Member Lending Institutions to a single borrower in Micro and
Small Enterprises sector
The coverage includes:
- Up to ₹200 lakh for credit facility secured by the way of Primary Security.
- Up to ₹100 lakh for unsecured credit facility secured by the way of term loan and/or working capital facilities without any collateral security and/or third party guarantees or such amounts as may be decided by the Trust.
FAQs
CGT-MSE stands for Credit Guarantee Fund Trust for Micro and Small Enterprises. It is a trust set up by the Government of India to provide credit guarantees to lenders (banks and financial institutions) for loans given to Micro and Small Enterprises (MSEs).
To ensure the successful execution of this Credit Guarantee Scheme for all Micro and Small Enterprises, the Government of India has collaborated with SIDBI (Small Industries Development Bank of India) and the Ministry of Micro, Small, and Medium Enterprises to establish a trust named The Credit Guarantee Trust Fund Scheme.
The Government of India has introduced a major benefit for small and micro-business sectors by offering access to credit without requiring collateral. This initiative ensures crucial funding for enterprises in these sectors, including both established businesses and new ventures. Providing bank credit without the complexities of collaterals or third-party guarantees can greatly support first-generation entrepreneurs in achieving their goal of establishing their own Micro and Small Enterprise (MSE).
The primary objective of CGT-MSE is to facilitate credit availability to MSEs by providing a credit guarantee cover for their loans. This encourages lenders to extend credit to MSEs without the need for collateral or third-party guarantees.
Micro and Small Enterprises (MSEs) engaged in manufacturing or service activities are eligible to apply for CGT-MSE Loans. These enterprises should meet the eligibility criteria specified by the lender and CGT-MSE guidelines.
The benefits of CGT-MSE Loans include:
- Credit guarantee cover for loans up to a specified limit, reducing the risk for lenders.
- No requirement for collateral or third-party guarantees from MSEs.
- Enhanced credit access and affordability for MSEs, leading to business growth and expansion.
- Simplified loan approval process with reduced documentation requirements.
CGT-MSE works by providing a credit guarantee cover to lenders for loans given to MSEs. When an MSE applies for a loan, the lender assesses the creditworthiness of the borrower and the viability of the business. If the loan meets CGT-MSE guidelines, the trust provides a guarantee cover to the lender for a portion of the loan amount, reducing the lender’s risk.
The maximum loan amount covered under CGT-MSE depends on the category of MSEs:
- For Micro Enterprises, the maximum loan amount covered is up to ₹25 lakh.
- For Small Enterprises, the maximum loan amount covered is up to ₹50 lakh.
The tenure of CGT-MSE Loans typically ranges from 3 to 5 years, depending on the repayment capacity and terms agreed upon between the borrower and the lender.
The documents required for applying for CGT-MSE Loans may include:
- Business registration documents
- KYC documents of the business owner(s)
- Financial statements (balance sheet, profit and loss statement)
- Project report or business plan
- Loan application form
- Other documents as per the lender’s requirements and CGT-MSE guidelines