CGTMSE ( Credit Guarantee Fund Trust for Small & Medium Enterprises)
CGTMSE scheme was established in the year 2000. The objective of CGTMSE scheme is to provide bank credit to MSMEs without the hassles of Collaterals/third party Guarantees so that young enterpreneurs can realise their dream of setting up or running their own Micro & Small Enterprises. It is for the purpose of strengthing credit flow to the MSME sector.
Under CGTMSE, MSMEs including service sector are eligible for loan upto Rs 2 crore. The Loan sanctioned in the scheme is backed by the Trust which provides the Guarantee cover for the large portion of the amount.
Important Features of CGTMSE Scheme
1.Lending Insitutions :
All scheduled Commercial Banks, Specified Regional Rural Banks (RRB), Non Banking Financial Companies (NBFCs),Small Finance Banks,Foreign Banks and Financial Institutions are eligible Lending Instituions.The Institution that has an agreement with Trust are called Member Lending Institutions.
2.The Trust guarantees upto 75% of the defaulted principal amount ( the extent of credit guarantee is 85% for micro enterprises for credit upto Rs 5 Lacs).The cover come up with the maximum guarantee cover of Rs 1.5 cr for Rs 2 crore Loan.
|Category||Maximum extent of Guarantee where credit facility is|
|Upto 5 lakh||Above 5 lakh upto 50 lakh||Above 50 lakh upto 200 lakh|
|Micro Enterprises||85% of the amount in default subject to a maximum of 4.25 lakh||75% of the amount in default subject to a maximum of 37.50 lakh||75% of the amount in default subject to a maximum of 150 lakh|
|Women entrepreneurs/ Units located in North East Region (incl. Sikkim) (other than credit facility upto 5 lakh to micro enterprises)||80% of the amount in default subject to a maximum of 40 lakh|
|All other category of borrowers||75% of the amount in default subject to a maximum of 37.50 lakh|
|Activity||From 10 lakh upto 100 lakh|
|MSE Retail Trade||50% of the amount in default subject to a maximum of 50 lakh|
Any facility given on the basis of third party guarantee and where the type of activity is not manufacturing, services and retail trade shall not be allowed for coverage under the CGTMSE scheme.Partial collateral security model can be used where the MLIs will be allowed to obtain collateral security for a part of the credit facility, whereas the remaining part of the credit facility, up to a maximum of ₹ 200 lakh can be covered under the CGTMSE Scheme.The Trust also reserves the right to reject any application for the guarantee cover, if it deems necessary.