The Union Cabinet has approved package for augmentation of the Corpus of Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE) for supporting Micro and Small Enterprises (MSEs).
With this, the corpus of the Trust has been increased from Rs. 2,500 crore to Rs. 7,500 crore and it will be fully funded by the Union Government.
Cabinet’s proposal also entails to
- Increase coverage of the loans covered under the credit guarantee scheme from Rs. 1 crore to Rs. 2 crore;
- Increase coverage of the credit guarantee scheme for loans extended to MSEs by NBFCs also. This will enable the Trust to enhance the quantum.
Benefits of these measures
- Lower the level of leverage
- Improve sustainability of the Fund.
- Improve financial management.
- Limit the unfunded contingent liabilities.
- Enable the CGTMSE to enhance the quantum of credit guarantee to larger number of MSEs.
Augmentation of the corpus of the fund will facilitate larger flow of credit to MSEs. This in turn, will lead to increase output and employment and thereby promote equity and inclusiveness. Start-ups will also be encouraged to set up enterprises based on innovation and new ideas as the scheme provides credit without collateral and third-party guarantee.