CGTMSE


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

Credit Guarantee Fund Trust for Micro and Small Enterprises (MSE) / (CGTMSE) Scheme
 
Credit Guarantee Fund Trust for Micro and Small Enterprises (MSE). (CGTMSE) scheme of SIDBI and Ministry of Small and Medium Enterprises as defined under MSMED Act, 2006. CGTMSE was set up to strengthen credit delivery system and facilitate flow of credit to the MSE sector. The Credit Guarantee under CGTMSE seeks to reassure the lender that, in the event of a MSE unit, which availed collateral free credit facilities, fails to discharge its liabilities to the lender; the CGMSE would make good the loss incurred by the lender up to 85 per cent of the credit facility. During the current financial year (April to October 2015), total number of proposals approved under the scheme was 2,31,774 involving a guarantee amount of Rs.11,446 crore.

Objective
 
Availability of bank credit without the hassles of collaterals / third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE). Keeping this objective in view, Ministry of Micro, Small & Medium Enterprises (MSME), Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector. To operationalise the scheme, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

The main objective is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed.  The other objective is that the lender availing guarantee facility should endeavor to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency.  The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSE unit, which availed collateral free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 75 / 80/ 85 per cent of the credit facility.


Wednesday, 06th Apr 2016, 09:22:43 AM

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