CGTMSE issues guidelines regarding reduction of annual guarantee fee for loans upto Rs. 1 crore from a peak rate of 2% per annum to as low as 0.37% per annum
Limit on ceiling for guarantees enhanced from Rs. 2 crore to Rs. 5 crore
The Prime Minister, Shri Narendra Modi has said that revamping of credit guarantee scheme is a part of Government’s efforts to strengthen the MSME sector.
In a tweet thread Union Minister for MSME, Shri Narayan Rane informed that as part of the continuous efforts to strengthen MSE Sector, Credit Guarantee Scheme has been further revamped to increase the flow of credit to MSEs.
Responding to the tweet thread by the Union Minister, the Prime Minister tweeted;
“This is a part of our Government’s efforts to strengthen the MSME sector.”
In Union Budget 2023-24, Union Finance Minister Mrs Nirmala Sitharaman announced the revamping of Credit Guarantee Scheme for Micro & Small Enterprises with effect from 01.04.2023, with an infusion of Rs 9,000 crore to the corpus to enable additional collateral-free guaranteed credit of Rs. 2 lakh crore and the reduction in the cost of the credit by about 1 per cent.
Consequent upon this, the following significant steps have been taken:
- The corpus of Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) has been infused with a sum of Rs. 8,000 crore on 30.03.2023.
- CGTMSE has issued guidelines regarding reduction of annual guarantee fee for loans upto Rs. 1 crore from a peak rate of 2% per annum to as low as 0.37% per annum. This will reduce the overall cost of credit to the Micro & Small Enterprises to a great extent.
- The limit on ceiling for guarantees has been enhanced from Rs. 2 crore to Rs. 5 crore.
- For settlement of claims in respect of guarantees for loan outstanding upto Rs. 10 lakh, initiation of legal proceedings will no longer be required.
CGTMSE created a new landmark by touching the milestone figure of approving guarantees worth Rs. 1 lakh crore during FY 2022 – 23.