Credit Guarantee Funds Trust for Micro & Small Enterprises: In the last budget, the government gave a big gift to small businessmen. A revised Credit Guarantee Scheme for the micro and small industries (MSMEs) of the country came into effect from April 1, 2023. In this, the annual guarantee fee for loans up to Rs 1 crore is being reduced from maximum 2% to 0.37%. This will reduce the total cost of credit for small businessmen. In the new scheme, the maximum limit of guarantee has also been increased from Rs 2 crore to Rs 5 crore.
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) has issued guidelines in this regard. MSME Ministry had said that the guarantee limit has been increased from Rs 2 crore to Rs 5 crore. Also, there is no need to initiate legal proceedings for settlement of claims in respect of guarantee for credit outstanding up to Rs 10 lakh.
Finance Minister Nirmala Sitharaman had announced in the General Budget 2023-24 that the Credit Guarantee Scheme for Micro and Small Enterprises will be restarted from April 1, 2023. Under this announcement, an amount of Rs 8,000 crore has been infused into CGTMSE on March 30, 2023. Officials said that CGTMSE has created a new milestone by touching the milestone figure of approving guarantees of Rs 1 lakh crore during the financial year 2022-23.
An investment of Rs 8,000 crore was made in the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) fund on March 30, 2023.
CGTMSE issued guidelines regarding reducing the annual guarantee fee from the high rate of 2% per annum to 0.37% per annum for credit up to Rs 1 crore. This reduced the overall cost of credit for micro and small enterprises to a great extent.
The maximum limit for guarantees was increased from Rs 2 crore to Rs 5 crore.
No need to initiate legal proceedings for settlement of claims in respect of guarantees for outstanding credit up to Rs 10 lakh.
The MSME Ministry recently announced that the guaranteed amount provided by the government's Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which guarantees lenders for collateral-free loans to micro and small enterprises (MSEs), has surpassed Rs 1.50 lakh crore in the current financial year compared to Rs 1.04 lakh crore in FY23, a sharp increase of 50%. The Ministry of MSME and CGTMSE took a number of strategic actions to enable collateral-free lending to Micro & Small Enterprises (MSEs), and these efforts have resulted in this milestone, the ministry said.