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It is one of the government-sponsored schemes for Micro, Small and Medium Enterprises (MSMEs). It was launched on 30th August 2000 by the Ministry of Micro, Small and Medium Enterprises under the Government of India.
The primary objective behind the formation of this trust is to provide financial assistance to MSMEs without any third-party guarantee or collateral. This scheme assures the lenders that in case of default by them a guarantee cover shall be provided by the trust in the ratio of 50, 75, 80, 85 percent of the amount given.
This fund has the following objectives:
Under the CGTMSE scheme, a loan of up to 200 lakh rupees can be provided to MSMEs. A unique favor is given to the women entrepreneurs who are eligible for this scheme. Loans can also be availed by borrowers who live in the North Eastern States of India like Sikkim.
Credit guarantee means a situation where the loan to an applicant is backed by a party without any need of external collateral or third-party guarantee. The loan sanctioned by the member lending institution is supported by the scheme that gives guarantee cover for the large part of a loan amount.
The fee charged by the CGTMSE is a percentage of 1% per annum of the amount that is sanctioned-
The credit guarantee that can be availed under this scheme is 75% or 80% of the amount given to a maximum cap of 62.5 lakh/65 lakh rupees for a credit facility of up to 50 lakh rupees. The percentage guarantee for micro-enterprises is 85% for a sum of up to 5 lakh rupees.
The percentage of guarantee is 50% of the amount sanctioned for a credit of above 50 lakh rupees with a maximum cap of 100 lakhs rupees. The tenure of the guarantee is a block of five years.
The extent of cover is up to 80% for the following:
Where there is a default, the trust shall settle claims up to 75% or 80% of the amount not repaid up to the limit cap of 50 lakhs rupees. Where the amount is above 50 lakh rupees and up to 200 lakh rupees the guarantee cover shall be reduced to 50%.
The following enterprises are eligible for this scheme:
It is also available now for certain NBFCs (Non-Banking Financial Companies).
The following banks can work as eligible lenders under this scheme-
The procedure to opt for this is as follows:
Also, read: MSME Ministry launched National Level Awareness Program 2020
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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