CGTMSE – Credit Guarantee Fund Trust for Micro and Small Enterprises
Credit Guarantee Funds Trust for Micro and Small Enterprises was launched in 2000. This is a joint initiative of the MSME Ministry, the government of India, and SIDBI (Small Industries Development Bank of India).
A CGTMSE scheme provides credit guarantees to lenders who make business loans to SMEs and MSMEs. It aims to help SMEs flourish in India.
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What is CGTMSE scheme?
The entire purpose of the CGTMSE scheme is to assist industries without using any third-party guarantees or collateral. The Credit Guarantee Funds Trust provides lenders with the assurance that in the event of default by them, a guaranteed percentage of the amount so given will be provided by the trust. Its purposes are as follows:
To determine if the companies' projects are financially viable
A credit scheme that offers term loans and composite credit
MSMEs are eligible for loans up to Rs. 200 lakhs under this scheme. This scheme gives special consideration to women entrepreneurs. Similarly, loans are provided to borrowers located in Sikkim, Jammu & Kashmir, and other northeastern Indian states.
Features of the CGTMSE Scheme
According to business needs
Guarantee for credit facilities
Without collateral or third-party guarantees
Micro and small businesses with revenues up to Rs. 2 crores and retail businesses with revenues up to Rs. 1 crore.
Loan/limit of 75% not covered by collateral
Loans can be availed from
Small Finance Banks, NBFCs, Regional Rural Banks, and institutions such as NSIC, NEDFI, etc.
What is CGTMSE fees?
Fees are charged by the trust fund at a rate of 1% per annum of the sanctioned amount:
0.75% on the credit of up to Rs. 5 lakh
For amounts higher than Rs. 5 lakhs, but no more than Rs. 100 lakhs, apply 0.85%
Under this scheme, a credit guarantee is available for up to Rs. 62.5 Lakh / 65 Lakh on a credit facility of up to Rs. 50 Lakh. Micro-enterprises are eligible for 85% guarantee for a sum not exceeding Rs. 5 lakhs. If the credit amount is above Rs. 50 lakhs, the percentage of guarantee for the credit is 50%. The guarantee tenure is 5 years.
CGTMSE loan scheme eligibility criteria for lending borrowers and lending institutions are as follows:
The CGTMSE scheme has the support of lenders who provide funding for specific sectors. Entities and institutions eligible for CGTMSE financing include:
Small and medium enterprises (SMEs) both existing and new
Scheduled Commercial Banks (SCBs)
Regional Rural Banks (RRBs)
Small Finance Banks (SFBs)
Non-banking Financial Companies (NBFCs)
Small Industrial Development Bank of India (SIDBI)
National Small Industries Corporation (NSIC)
North Eastern Development Finance Corporation Ltd. (NEDFi)
A guarantee cover of 80% is available to micro and small businesses owned and/or operated by women entrepreneurs, whereas a guarantee of Rs. 50 lakh is available to credit and loan facilities in the North East Region (NER). CGTMSE does not offer guarantee cover to educational institutions, agriculture, training institutes, or Self-Help Groups (SHGs).
An applicant's profile and business requirements determine the CGTMSE loan limit.
Documents required for loan application
Below stated are the documents required for a Loan under the CGTMSE scheme and its coverage:
Fill out the CGTMSE loan application form and attach a passport-sized photo
Business Incorporation or Company Registration Certificate
CGTMSE Loan Coverage Letter
Copy of Bank Loan Approval
Any other document required by the Bank
CGTMSE also provides business units with rehabilitation assistance. CGTMSE covers the rehabilitation loan extended by the lender within the credit cap of Rs. 1 crore if a business unit is in a bad condition due to factors beyond its control.
Which banks provide the CGTMSE scheme?
Banks that are eligible as lenders include:
Lists banks, both public and private, that are either in the public or private sector.
Some Regional Rural Banks have been classified as "Sustainable Viable" by NABARD. Such banks are eligible to participate in the program.
A total of 133 eligible lending institutions are registered with the TRUST. (Till May 31, 2015) which comprises of:
26 Public Sector Banks
21 Private Sector Banks
73 Regional Rural Banks
4 Foreign Banks
Delhi Financial Corporation
Kerala Financial Corporation
Jammu & Kashmir Development Finance Corporation Ltd.
Export-Import Bank of India
The Tamil Nadu Industrial Investment Corporation Ltd.
National Small Industries Corporation (NSIC), North Eastern Development Finance Corporation (NEDFI)
Small Industries Development Bank of India (SIDBI)
How to apply for CGTMSE scheme?
Following is the procedure to choose this plan:
A business plan including all the financial details is the first step towards availing of this scheme. Business models must explain the viability of a project.
It is up to the lender bank to decide which lender bank to approach after the business model is constructed. As soon as that is done, the bank must receive the application and business plan.
Upon receiving the application and the model, the bank will verify all the details.
After verifying the application, the bank will forward it to the CGFTMSE Fund where it will be examined once again. A business' funds will be released to the business if the application is approved.
CGTMSE guarantees and service fees will have to be paid by the business once it receives approval.
Frequently Asked Questions
What is the CGTMSE fee?
What are the fees charged by the CGTMSE? The fees charged by the trust fund is a percentage of 1% p.a of the amount so sanctioned: 0.75% – for credit of up to Rs. 5 Lakhs.
Is CGTMSE fee refundable?
In case of pre-closure / request for refund, refund of proportionate annual guarantee fee (GF/AGF/ASF) will be allowed only where closure is marked in CGTMSE system/refund requested is within 3 months from the date of receipt of fee by CGTMSE.
What does CGTMSE mean?
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is jointly set up by Ministry of Micro, Small & Medium Enterprises (MSME), Government of India and Small Industries Development Bank of India (SIDBI) to catalyze the flow of institutional credit to Micro & Small Enterprises (MSEs).
What is the annual guarantee fee?
The Annual Guarantee Fee payable would be on the outstanding loan amount instead of the guaranteed amount for credit facilities sanctioned/renewed to MSEs on or after April 01, 2018, as per Circular No. 139/2017-18.
When can you claim CGTMSE?
For MLI to lodge a claim, the guarantee in respect of that credit facility should have been in force at the time of account turning NPA and after completion of lock-in period of 18 months (from the guarantee start date or last disbursement date whichever is later).
Who is eligible for CGTMSE?
New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Educational Institutions, Agriculture, Self Help Groups (SHGs), Training Institutions etc.
What is the lock-in period in CGTMSE?
What is the CGTMSE claim settlement procedure? There is a lock-in period of 18 months after the disbursal of the final tranche of the loan for preferring claim.
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