Credit Guarantee Scheme for Micro & Small Enterprises (CGTMSE)

CGTMSE

Ministry of MSME started Credit Guarantee Scheme for Micro & Small Enterprises (MSEs) (CGTMSE) in the year 2000. In order to implement the Credit Guarantee Scheme, Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) was setup by the Ministry of MSME, GoI and SIDBI.

Credit Guarantee Scheme aims to facilitate access to credit for un-served and under-served MSE segment of MSME Sector, making availability of credit from conventional lenders to new generation entrepreneurs and under privileged that lack supporting their loan proposal with collateral security and/or third party guarantee.

Over past two decades, CGTMSE has established itself as an important institution endeavoring to increase the flow of credit to MSEs segment without the hassle of collateral security. With effect from 01.04.2023, this scheme facilitates collateral free credit support of upto Rs. 5 crore to MSEs, extended by the CGTMSE’s Member Lending Institutions.

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.

Category
(including Trading activity)

Maximum extent of Guarantee Coverage

where guaranteed credit facility is

Upto  ₹ 5 lakh

Above   5 lakh & upto  50 lakh

Above   50 lakh & upto  500 lakh

Micro Enterprises

85%

75%

75%

MSEs located in North East Region (incl. Sikkim, UT of Jammu & Kashmir and UT of Ladakh)

80%

Women entrepreneurs / SC/ST entrepreneurs / MSEs situated in Aspirational District / ZED certified MSEs / Person with Disability (PwD) / MSE promoted by Agniveers

85%

All other category of borrowers

75%

The extent of guarantee coverage for MSEs situated in Identified Credit Deficient Districts (ICDD) is additional 5% over and above the applicable guarantee coverage wef December 15, 2023(i.e for guarantee of 75%, the coverage would be 80%, for 80% it would be 85% and for 85% it would be 90%)

Guarantee will commence from the date of payment of guarantee fee and shall run through the agreed tenure of the term credit in case of term loans / composite loans and for a period of 5 years where working capital facilities alone are extended to borrowers, or for such period as may be specified by the Guarantee Trust in this behalf.

Annual Guarantee Fee Structure under
Credit Guarantee Scheme for Co- Lending (CGSCL- CGS III)
As per circular No. 223/2022-23 dated March 31, 2023, on modification in Annual Guarantee Fee Structure under CGSCL-CGS III and subsequent Circular No. 235/2023- 24 dated December 18, 2023 regarding increase in the Ceiling of Guarantee from ₹200 lakh to ₹500 lakh. Accordingly, the updated fee structure under CGSCL-CGS III is given below:

Accordingly, the updated fee structure under CGSCL-CGS III is given below:

Slab(₹) Standard Rate (SR)* (%pa)
0-10 lakh 0.37
Above 10 lakh upto 50 lakh 0.55
Above 50 lakh upto 1 crore 0.6
Above 1 crore upto 2 crore 1.2
Above 2 crore upto 5 crore 1.35

*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 above fee structure shall be applicable for all the loan

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