The Ministry of Micro, Small and Medium Enterprise (MSME) implements Credit Guarantee Scheme (CGS) for Micro Small Enterprises (MSEs) through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to provide credit guarantees for the credit facilities extended to MSEs, including first-generation entrepreneurs, women-led enterprises, and units located in backward districts, without collateral security or third-party guarantees, across the Country.

Measures taken by the Government to improve credit flow and enhance awareness of the CGTMSE scheme among MSEs include:

1. The guarantee ceiling for the loan extended under CGS was enhanced from Rs. 5 crore to Rs. 10 crore w.e.f 01.04.2025.
2. Annual Guarantee Fees (AGF) structure revised with 50% reduction in standard rate to as low as 0.37% per annum.
3. Enhanced extent of guarantee for MSEs led by special category including women led MSEs.
4. As per Reserve Bank of India’s Master Direction - Lending to Micro, Small & Medium Enterprises (MSME) Sector dated 09.02.2026, all Scheduled Commercial Banks are mandated not to accept collateral security in the case of loans up to Rs.20 lakh extended to units in the MSE sector.
5. To promote credit flow to MSEs in Identified Credit Deficient Districts (ICDD) as per RBI, CGTMSE offers 10% discount on the AGF and extend an additional 5% guarantee coverage.
6. To provide enhanced guarantee coverage for credit facilities extended by Member Lending Institutions (MLIs) to the MSEs engaged in Manufacturing Sector situated in the State of Tamil Nadu, a special guarantee scheme “Tamil Nadu Credit Guarantee Scheme (TNCGS)” in collaboration with Government of Tamil Nadu is being implemented.
7. The performance of banks under the CGTMSE Scheme and the overall flow of credit to the MSME sector are reviewed periodically in the State Level Bankers' Committee (SLBC) meetings.
8. Ministry of MSME, through its field offices, regularly organizes outreach programmes in coordination with MSME/ Industry Departments of States/UTs concerned and other stakeholders like CGTMSE, SIDBI, SLBC, Banks, MSME Associations etc., to create awareness of the Scheme.

This information was given by the Union Minister of State for MSME, Sushri Shobha Karandlaje in Lok Sabha as a written reply to a question today.

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Sunil Kumar Tiwari

E-Mail - hipessi[at]gmail[dot]com

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