Context:
Women-owned micro and small enterprises will get enhanced credit guarantee coverage of 90 percent under the CGTMSE scheme, after its board approved the new guidelines recently.
Relevance:
GS II: Government Policies and Interventions
Overview of CGTMSE:
- Launched by the Ministry of Micro, Small & Medium Enterprises (M/o MSME) and operational since January 2000.
- Aims to boost institutional credit accessibility to Micro and Small Enterprises (MSEs), particularly those that are unserved or underserved within the MSME sector.
Key Features:
- Launch Date: Officially started on August 30, 2000.
- Target Group: Focuses on providing credit to new entrepreneurs and those from economically disadvantaged backgrounds lacking collateral or third-party guarantees.
- Collaborative Establishment: Developed jointly by M/o MSME and the Small Industries Development Bank of India (SIDBI).
Funding Structure:
- Financial Support: Funded by contributions from the Government of India and SIDBI, maintaining a 4:1 ratio in favor of government support.
Eligibility and Lending Parameters:
- Eligible Institutions:
- Includes Scheduled commercial banks, certain Regional Rural Banks, National Small Industries Corporation Ltd. (NSIC), North Eastern Development Finance Corporation Ltd. (NEDFi), SIDBI, selected Small Finance banks, and NBFCs.
- Credit Facilities:
- Offers collateral-free credit support up to Rs. 5 crores.
- Guarantee coverage varies by enterprise size and borrower category, providing up to 85% coverage for micro-enterprises for credits up to Rs. 5 lakhs, and 75% for larger amounts up to Rs. 500 lakhs.
- Enhanced coverage for businesses in the North East Region and special categories such as women-owned MSMEs, SC/ST entrepreneurs, and businesses in Aspirational Districts.
In Event of Default:
- Settlement Provisions: The trust handles claims by covering up to 75%, with specific cases allowing for 85% or 80% coverage, based on the borrower’s category.
-Source: The Hindu
