CGTMSE stands for Credit Guarantee Fund Trust for Micro and Small Enterprises. Basically, Govt. launched the CGTMSE scheme for small scale industry sectors to provide collateral free loans.
Under this scheme, an entrepreneur can apply for the loan from the bank without any collateral deposit. And we all understand the importance of the funding assistance in starting a project.
In starting a new project, almost every startup entrepreneurs need funding assistance from the financial institutions including Bank and NBFCs. However, banks often ask for collateral security to the owners. And banks ask for the collateral amount the same as the loan amount.
Additionally, banks ask for third party guarantee too. And it is immensely difficult for a first generation entrepreneur to arrange the collateral to get the access to the loan fund. And here, the scheme comes as an effective solution.
The main objective of the scheme is making the bank credit available to the entrepreneurs without the hassles of collaterals/third party guarantees. Therefore, the scheme becomes a support to the first generation entrepreneurs to realize their dream of setting up a unit of their own Micro and Small Enterprise (MSE).
Keeping this objective in view, Ministry of Micro, Small & Medium Enterprises (MSME), Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate the flow of credit to the MSE sector.
To operationalise the scheme, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
The main objective is that the lender should give importance to the project viability. Additionally, the lender secures the credit facility purely on the primary security of the assets financed.
The other objective is that the lender availing guarantee facility should endeavor to give composite credit to the borrowers. So that the borrowers obtain both term loan and working capital facilities from a single agency.
The Credit Guarantee Scheme (CGS) seeks to reassure the lender that, in the event of an MSE unit, which availed collateral free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 50/75/80/85 per cent of the credit facility.
Micro & Small Enterprises as per MSMED Act eligible.
Credit guarantee for MSE loans up to 1 crore, without collateral and third party guarantee.
Both Manufacturing and Service sectors covered.
Credit for retail trade, educational/training institutions, and SHGs are not eligible for coverage.
All fund / non-fund based facility covered.
Maximum Guarantee Cover of up to 85% of credit facility covered under CGS.
Guarantee coverage is 50% for credit facility covered under CGS above 50 lakh.
133 Banks / RRBs / other lending institutions registered as MLIs with CGTMSE (26 PSU Banks, 21 Pvt. Banks, 73 RRBs, 9 Financial Institutions and 4 Foreign Banks).
New and existing Micro and Small Enterprises engaged in manufacturing or service activity can apply under CGTMSE Scheme. However, the scheme excludes Retail Trade, Educational Institutions, Agriculture, Self Help Groups (SHGs), Training Institutions etc.
As of now, all activities that come under service sector as per MSMED Act, 2006 except retail trade are eligible for coverage under the scheme. Additionally, small road and water transport loans are eligible for guarantee cover. Under the Guarantee Scheme, you need to obtain IT PAN number prior to availing of credit facility from the eligible lending institution. Also, it is a mandatory requirement under section 139A(5) read with section 272(C) of the I.T Act 1961 to indicate IT PAN on all tax documents which include returns, challans, appeals, etc. However, in respect of loans up to 10 lakh, CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover.
Additionally, existing units can apply for the additional credit facilities in the form of term loan or renewal of working capital facilities. Any facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme. The Trust also reserves the right to reject any application for the guarantee cover, if it deems necessary.
The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower. Alternatively, they may decide to bear it themselves. The banks shall follow the guidelines issued by RBI. However, the interest rate shall not exceed 3% over and above the Prime Lending Rate of the MLI, excluding the annual service fee.
First of all, you can’t apply for the loan under CGTMSE Scheme online. You have to contact to the banks nearby you. Broadly, there are four steps for applying for the loan under this scheme.
1 Allahabad Bank 2 Andhra Bank 3 Bank of Baroda 4 Bank of India 5 Bank of Maharashtra 6 Bharatiya Mahila Bank Ltd. 7 Canara Bank 8 Central Bank of India 9 Corporation Bank 10 Dena Bank 11 IDBI Bank Limited 12 Indian Bank 13 Indian Overseas Bank 14 Oriental Bank of Commerce 15 Punjab & Sind Bank 16 Punjab National Bank 17 Syndicate Bank 18 UCO Bank 19 Union Bank of India 20 United Bank of India 21 Vijaya Bank
1 State Bank of India 2 State Bank of Bikaner & Jaipur 3 State Bank of Hyderabad 4 State Bank of Mysore 5 State Bank of Patiala 6 State Bank of Travancore
1 Axis Bank Ltd. 2 Catholic Syrian Bank Ltd. 3 City Union Bank 4 Development Credit Bank Ltd. 5 HDFC Bank Ltd. 6 ICICI Bank Ltd. 7 IDFC Bank Ltd. 8 IndusInd Bank Ltd. 9 ING Vysya Bank Ltd. 10 Karnataka Bank Ltd. 11 Kotak Mahindra Bank Ltd. 12 Lakshmi Vilas Bank Ltd. 13 Tamilnad Mercantile Bank Ltd. 14 The Dhanalakshmi Bank Ltd. 15 The Federal Bank Ltd. 16 The Jammu & Kashmir Bank Ltd. 17 The Karur Vysya Bank Ltd. 18 The Nainital Bank Ltd. 19 The Ratnakar Bank Ltd. 20 The South Indian Bank Ltd. 21 YES Bank Limited
1 Barclays Bank PLC 2 Bank of Bahrain and Kuwait 3 Deutsche Bank 4 Standard Chartered Bank
1 Allahabad UP Gramin Bank 2 Andhra Pradesh Grameena Vikas Bank 3 Andhra Pragathi Grameena Bank 4 Aryavart Gramin Bank 5 Assam Gramin Vikash Bank 6 Baitarani Gramya Bank 7 Ballia Etawah Gramin Bank 8 Bangiya Gramin Vikash Bank 9 Baroda Gujarat Gramin Bank 10 Baroda Rajasthan Gramin Bank 11 Baroda Uttar Pradesh Gramin Bank 12 Bihar Kshetriya Gramin Bank 13 Chaitanya Godavari Grameena Bank 14 Chattisgarh Rajya Gramin Bank 15 Dena Gujarat Gramin Bank 16 Hadoti Kshetriya Gramin Bank 17 Himachal Gramin Bank 18 Jaipur Thar Gramin Bank 19 Jammu & Kashmir Gramin Bank 20 Jharkhand Gramin Bank 21 Karnataka Vikas Grameena Bank 22 Kashi Gomti Samyut Gramin Bank 23 Kaveri Grameena Bank 24 Kerala Gramin Bank 25 Langpi Dehangi Rural Bank 26 Madhya Bharat Gramin Bank 27 Madhya Bihar Gramin Bank 28 Maharashtra Godavari Gramin Bank 29 Maharashtra Gramin Bank 30 Malwa Gramin Bank 31 Meghalaya Rural Bank 32 MGB Gramin Bank 33 Mizoram Rural Bank 34 Nainital – Almora Kshetriya Gramin Bank 35 Narmada Malwa Gramin Bank 36 Neelachal Gramya Bank 37 Pallavan Gramin Bank 38 Pandyan Grama Bank 39 Parvatiya Gramin Bank 40 Pragathi Krishna Grameena Bank 41 Prathama Bank 42 Puduvai Bharathiar Grama Bank 43 Punjab Gramin Bank 44 Purvanchal Gramin Bank 45 Rajasthan Gramin Bank 46 Rewa Siddhi Gramin Bank 47 Rushikulya Gramya Bank 48 Samastipur Kshetriya Gramin Bank 49 Saptagiri Grameena Bank 50 Sarva Haryana Gramin Bank 51 Sarva UP Gramin Bank 52 Satpura Narmada Kshetriya Gramin Bank 53 Saurashtra Gramin Bank 54 Sharda Gramin Bank 55 Shreyas Gramin Bank 56 Sutlej Gramin Bank (SGB) 57 Telangana Gramin Bank 58 Tripura Gramin Bank 59 Triveni Kshetriya Gramin Bank 60 Uttar Bihar Gramin Bank 61 Uttaranchal Gramin Bank 62 Uttarbanga Kshetriya Gramin Bank 63 Vananchal Gramin Bank 64 Vidharbha Kshetriya Gramin Bank 65 Vidisha Bhopal Kshetriya Gramin Bank 66 Wainganga Krishna Gramin Bank