Launched in 2000, Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE) is a government initiative by the Ministry of Medium, Small and Micro Enterprises (MSME) in association with the Small Industries Development Bank of India (SIDBI). Its focus is to provide credit guarantee to financial institutions that provide loans to MSMEs. CGTMSE provides a guarantee to lending institutions up to a certain limit for all lending done by them to the MSME sector. This initiative allows banks and other lending institutions to provide funds to first generation entrepreneurs without the need for collateral/security or third party guarantees.
Eligible Borrowers: All new and existing MSMEs are eligible for this credit guarantee under certain conditions as defined under MSMED Act,2006.
Eligible Lending Institutions: All scheduled commercial banks and specified Regional Rural Banks (RRBs), including NSIC, NEFDi, and SIDBI can be considered as eligible lending institutions. The institutions that enter into an agreement with CGTMSE are called Member Lending Institutions (MLIs).
Extent of the guarantee
The Trust shall provide guarantee as under:
| Category | Maximum extent of Guarantee where credit facility is | ||
| Upto Rs.5 lakh | Above Rs.5 lakh upto Rs.50 lakh | Above Rs.50 lakh upto Rs.100 lakh | |
| Micro Enterprises | 85% of the amount in default subject to a maximum of Rs.4.25 lakh | 75% /
Rs.37.50 lakh |
Rs.37.50 lakh plus 50% of amount in default above Rs.50 lakh subject to overall ceiling of Rs.62.50 lakh |
| Women entrepreneurs/ Units located in North East Region (incl. Sikkim) other than credit facility upto Rs.5 lakh to micro enterprises |
80% of the amount in default subject to a maximum of Rs.40 lakh |
Rs.40 lakh plus 50% of amount in default above Rs.50 lakh subject to overall ceiling of Rs.65 lakh | |
| All other category of borrowers | 75% /
Rs.37.50 lakh |
Rs.37.50 lakh plus 50% of amount in default above Rs.50 lakh subject to overall ceiling of Rs.62.50 lakh | |
*Credit facilities extended by more than one bank and/or financial institution jointly and/or separately to eligible borrower upto a maximum upto Rs.100 lakh per borrower subject to ceiling amount of individual MLI or such amount as may be specified by the Trust.
Guarantee:
The guarantee cover will commence from the date of payment of guarantee fee and shall run through the agreed tenure of the term credit in respect of term credit / composite credit. Where working capital alone is extended to the eligible borrower, the guarantee cover shall be for a period of 5 years or a block of 5 years, or for such period as may be specified by the trust in this behalf.
Fee prescribed:
One-time guarantee fee at specified rate ((a)currently 1.00% in the case of credit facility upto Rs. 5 Lakh and 1.5% in the case of credit facility above Rs. 5 Lakh (b) 0.75%, in case of credit facilities upto Rs.50 lakh sanctioned to units in North Eastern Region including State of Sikkim) of the credit facility sanctioned (comprising term loan and / or working capital facility) shall be paid upfront to the Trust by the institution availing of the guarantee within 30 days from the date of first disbursement of credit facility (not applicable for Working capital) or 30 days from the date of Demand Advice (CGDAN) of guarantee fee whichever is later or such date as specified by the Trust.The annual service fee at specified rate (currently 0.50% in the case of credit facility upto Rs. 5 Lakh and 0.75% in the case of credit facility above Rs. 5 Lakh) on pro-rata basis for the first and last year and in full for the intervening years on the credit facility sanctioned (comprising term loan and / or working capital facility) shall be paid by the lending institution within 60 days ie. on or before May 31, of every year