{"id":42688,"date":"2022-04-27T12:43:29","date_gmt":"2022-04-27T07:13:29","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=42688"},"modified":"2022-04-27T12:43:31","modified_gmt":"2022-04-27T07:13:31","slug":"what-is-cgtmse-scheme","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/what-is-cgtmse-scheme\/","title":{"rendered":"What is CGTMSE Scheme? &#8211; An Overview"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The\nCGTMSE Scheme, or the Credit Guarantee Fund Scheme for Micro &amp; Small\nEnterprises, was introduced by the Government of India (GoI) to make\ncollateral-free credit to the MSE sector. Both the existing &amp; new\nenterprises are eligible to be covered under the CGTMSE Scheme. <strong><em>The\nMinistry of MSME, Government of India and Small Industries Development Bank of\nIndia (SIDBI), <\/em><\/strong>established a Trust named CGTMSE to implement the Credit\nGuarantee Fund Scheme for Micro &amp; Small Enterprises. Scroll down to check\nmore information regarding CGTMSE Scheme.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/what-is-cgtmse-scheme\/#CGTMSE_%E2%80%93_Meaning\" >CGTMSE \u2013\nMeaning<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/what-is-cgtmse-scheme\/#Who_can_avail_of_the_CGTMSE_Fund\" >Who can avail\nof the CGTMSE Fund?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/what-is-cgtmse-scheme\/#Banks_Associated_with_the_CGTMSE_Scheme\" >Banks\nAssociated with the CGTMSE Scheme<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/what-is-cgtmse-scheme\/#Eligibility_Criteria_for_CGTMSE_Scheme\" >Eligibility\nCriteria for CGTMSE Scheme<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/what-is-cgtmse-scheme\/#Documents_Required_for_CGTMSE_Loan_Process\" >Documents\nRequired for CGTMSE Loan Process<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/what-is-cgtmse-scheme\/#Procedure_to_Opt_for_CGTMSE_Scheme\" >Procedure to\nOpt for CGTMSE Scheme<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/what-is-cgtmse-scheme\/#Fees_charged_by_the_CGTMSE\" >Fees charged\nby the CGTMSE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/what-is-cgtmse-scheme\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"CGTMSE_%E2%80%93_Meaning\"><\/span>CGTMSE \u2013\nMeaning<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\noverall idea behind this is to provide financial assistance to these industries\nwithout any 3<sup>rd<\/sup> party guarantee or collateral. These schemes give\nthe assurance to the lenders that in case of default by them, a guarantee cover\nwill be given by Trust in the ratio of 50 or 75 or 80 or 85% of the amount so\ngiven.<\/p>\n\n\n\n<p><strong><em>Following\nare the objectives of the CGTMSE Scheme:<\/em><\/strong><\/p>\n\n\n\n<ul><li>To give loans and composite\ncredit schemes;<\/li><li>To check the financial\nfeasibility of the project of these companies.<\/li><\/ul>\n\n\n\n<p>According\nto this scheme, a loan of up to Rs. 200 lakhs can be provided to MSMEs. A\nspecial preference is provided to the women entrepreneurs who are eligible for\nthis scheme. Loans are given to borrowers also who are located in the\nNortheastern states of India, such as Jammu &amp; Kashmir and Sikkim.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_can_avail_of_the_CGTMSE_Fund\"><\/span>Who can avail\nof the CGTMSE Fund?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following\nare the enterprises which are eligible for this scheme:<\/p>\n\n\n\n<ul><li>Manufacturing activity.<\/li><li><strong><em>Service activity, except<\/em><\/strong>:<\/li><li>Retail Trade;<\/li><li>Training Institutions;<\/li><li>Self Help Groups;<\/li><li>Educational institutions.<\/li><\/ul>\n\n\n\n<p><strong><em>Note:\nIt\u2019s now available for selected NBFCs also.<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Banks_Associated_with_the_CGTMSE_Scheme\"><\/span>Banks\nAssociated with the CGTMSE Scheme<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol><li><strong><em>NABARD<\/em><\/strong>\nhas categorised some Regional Rural Banks under the <strong><em>Sustainable Viable<\/em><\/strong>\ncategory. These banks can act as an Eligible Bankers;<\/li><li>Scheduled Commercial Banks,\nwhich may be either a Foreign Bank or Private or Public\nSector<strong><em>;<\/em><\/strong><\/li><li>There are around 133 eligible\nlending institutions registered as MLIs of the Trust, which comprises:<\/li><li>Delhi Financial Corporation;<\/li><li>NSIC or National Small\nIndustries Corporation, NEDFI or North Eastern Development Finance Corporation;<\/li><li>Kerala Financial Corporation;<\/li><li>Export-Import Bank of India;<\/li><li>SIDBI;<\/li><li>The Tamil Nadu Industrial\nInvestment Corporation Limited;<\/li><li>21 Private Sector Banks;<\/li><li>4 Foreign Banks;<\/li><li>26 Public Sector Banks;<\/li><li>73 Regional Rural Banks;<\/li><li>J&amp;K Development Finance\nCorporation Ltd.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_Criteria_for_CGTMSE_Scheme\"><\/span>Eligibility\nCriteria for CGTMSE Scheme<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According\nto the CGTMSE guidelines, a credit guarantee is considered to back a borrower\nwith collateral &amp; 3<sup>rd<\/sup> party guarantees free advance. Under this\nscheme, the member lending institution, which can be an NBFC also, that lends\nto the MSME &amp; SME sector is eligible for a Maximum Credit Cap (MCC) of Rs.\n2 crores,&nbsp; which in any instance is meant\nto cover a large proportion of the loan amount. The eligibility norms\nprescribed to both the borrowers and credit providers are:<\/p>\n\n\n\n<ul><li><strong><em>Lending Borrowers<\/em><\/strong>:\nThe CGTMSE Scheme coverage is conditional to all new &amp; existing Small and\nMedium Enterprises:<\/li><li>For credit facilities, more\nthan Rs. 50 lakhs, the guarantee cap is only limited to Rs. 1 crore;<\/li><li>The maximum credit facility is\nRs. 50 lakhs for a guarantee cover not more than Rs. 62.50 lakhs or Rs. 65\nlakhs;<\/li><li>Term credit for the overall\noutstanding amount on the date the loan is declared to be an NPA or on the\nfiling date of a suit.<\/li><li>Lending Institutions: It covers\nthe whole range of scheduled commercial banks, specified NSIC, SFB, Regional\nRural Banks, NEDFi, SIDBI, and NBFCs who lend to the specific sector &amp; have\nentered into an agreement with CGTMSE\/the Trust for the purpose. These are\ndesignated as MLIs or Member Lending Institutions and number 131 at present.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Documents_Required_for_CGTMSE_Loan_Process\"><\/span>Documents\nRequired for CGTMSE Loan Process<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Availing\nof a credit facility\/loan from the lender involves a series of activities on\nthe borrower&#8217;s part for a seamless experience. The primary steps for the CGTMSE\nLoan Scheme can be presented as under:<\/p>\n\n\n\n<ul><li><strong><em>Set Up Business Entity<\/em><\/strong>: The units have to be incorporated a unique business enterprise in the appropriate category like Partnership, Proprietorship, or a <strong><a class=\"text-primary\" href=\"https:\/\/corpbiz.io\/public-limited-company-registration\">Limited Company<\/a><\/strong> and necessary approvals, certificates &amp; Tax Registrations are need to be attained to execute the project.<\/li><li><strong><em>Business Project Report<\/em><\/strong>: The project&#8217;s component should be well-defined based on detailed market analysis and study. The factors to be mandatorily covered are:<\/li><li>Promoter Profile;<\/li><li>Business Model;<\/li><li>Cost &amp; other financials.<\/li><li><strong><em>Submission<\/em><\/strong>: The project report and the loan application form are to be submitted to the lender for further processing. If the homework is proper, the 1<sup>st<\/sup> step towards successful completion of the process is taken.<\/li><li><strong><em>CGTMSE Scheme Banks Sanction<\/em><\/strong>: Once the application forms are submitted, the processing starts. After proper evaluation &amp; gauging of the feasibility of the project, the sanction is accorded in alignment with the policy of the lender.<\/li><li><strong><em>Obtaining CGTMSE Loan Cover<\/em><\/strong>: After sanctioning the loan, it&#8217;s the responsibility of the lender to file for guarantee cover at the CGTMSE.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_to_Opt_for_CGTMSE_Scheme\"><\/span>Procedure to\nOpt for CGTMSE Scheme<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol><li>The first step to avail of this\nscheme is to prepare a proper Business Plan comprising all the details,\nfinancial &amp; otherwise. The business model must be such that it explains the\nproject&#8217;s viability.<\/li><li>After the business model is\nconstructed, the decision of which lender bank to approach is to be taken. Once\nthat is completed, the application along with the business model is to be\nsubmitted to the bank.<\/li><li>The bank will examine and\nverify all the details of the application &amp; the model of the project so\nsubmitted.<\/li><li>After verification, the bank\nwill further send the application to the CGTMSE Scheme Fund, where the\napplication will be examined again. It is approved, the fund will educate the\nbank to release funds for the business.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fees_charged_by_the_CGTMSE\"><\/span>Fees charged\nby the CGTMSE<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The\nfees charged by the trust fund are 1% per annum of the amount so sanctioned:<\/em><\/strong><\/p>\n\n\n\n<ol><li>0.75% for credit of up to Rs. 5\nlakhs;<\/li><li>0.85% for credit above Rs. 5\nlakhs but up to Rs. 100 lakh.<\/li><\/ol>\n\n\n\n<p>The\ncredit guarantee available under CGTMSE Scheme is 75 or 80% of the amount, so\ngiven to a maximum cap of Rs. 62.5 lakh or 65 lakh for a credit facility of up\nto Rs. 50 lakhs. The percentage guarantee is 85% for micro-enterprises for a\ntotal of up to Rs. 5 lakhs. The percentage guarantee (%) is 50% of the amount\nso sanctioned for a credit of above Rs. 50 lakhs with an upper limit of Rs. 100\nlakhs. The tenure of the guarantee is a block of five years.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>New and existing <strong>Micro &amp; Small Enterprises<sup><a href=\"http:\/\/www.msme.gov.in\/know-about-msme\"><strong>[1]<\/strong><\/a><\/sup>\n <\/strong>that are involved in service or manufacturing activities are eligible for guarantee cover under the CGTMSE Schemes. It should be noted that enterprises involved in educational institutions, SHGs, and retail trade are not eligible under the schemes.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/government-schemes-launched-by-msme\/\">What are The Government Schemes Launched by MSME?\n<\/a><\/mark><\/p>\n\n","protected":false},"excerpt":{"rendered":"<p>The CGTMSE Scheme, or the Credit Guarantee Fund Scheme for Micro &amp; Small Enterprises, was introduced by the Government of India (GoI) to make collateral-free credit to the MSE sector. Both the existing &amp; new enterprises are eligible to be covered under the CGTMSE Scheme. The Ministry of MSME, Government of India and Small Industries [&hellip;]<\/p>\n","protected":false},"author":35,"featured_media":42691,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[176],"tags":[2302],"acf":{"service_id":"71"},"authorName":"Karan Singh","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/processed-1-150x150.jpeg","authorDescription":"A legal writing enthusiast, a wanderer, and a zealous reader. After gaining a lot of knowledge about the diverse legal topics and developing research skills, Karan joined the league of legal content writers to deliver quality-rich blogs.","postViews":4417,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/42688"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/35"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=42688"}],"version-history":[{"count":9,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/42688\/revisions"}],"predecessor-version":[{"id":42701,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/42688\/revisions\/42701"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/42691"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=42688"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=42688"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=42688"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}