Ř Ministry of MSME implements the Credit
Guarantee Scheme (CGS) for Micro and Small Enterprises (MSEs) to provide credit
guarantees for the credit facilities extended to MSEs
·
Credit
Guarantee Scheme (CGS): The
Ministry of MSME implements the Credit
Guarantee Scheme through the Credit Guarantee Fund Trust for Micro and Small Enterprises
(CGTMSE) to provide collateral-free
and third-party guarantee-free loans to MSEs, including
first-generation entrepreneurs, women-led enterprises and units in backward
districts.
·
Higher
Loan Coverage: The
maximum loan eligible for guarantee under CGTMSE was enhanced from ₹5 crore to
₹10 crore with effect from 1 April 2025.
·
Reduced
Guarantee Fee: The Annual Guarantee Fee (AGF)
has been reduced by 50%,
bringing the standard rate down to as
low as 0.37% per annum.
·
Greater
Support for Women: The
scheme provides higher
guarantee coverage for enterprises led by special categories,
including women-led MSEs.
·
Collateral-Free
Loans: As
per the RBI's Master
Direction on Lending to the MSME Sector (9 February 2026), all
Scheduled Commercial Banks are prohibited
from demanding collateral security for MSE loans up to ₹20 lakh.
·
Support
for Credit-Deficient Districts:
MSEs in Identified Credit
Deficient Districts (ICDDs) receive a 10% discount on AGF and
an additional 5% guarantee
coverage under CGTMSE.
·
Tamil
Nadu-Specific Scheme: A
special Tamil Nadu Credit
Guarantee Scheme (TNCGS) is being implemented jointly with the
Tamil Nadu Government to provide enhanced guarantee coverage for
manufacturing-sector MSEs.
·
Regular
Monitoring:
Banks' performance under CGTMSE and the overall flow of MSME credit are reviewed periodically in State Level
Bankers' Committee (SLBC) meetings.
·
Awareness
Initiatives: The
Ministry of MSME conducts regular
outreach and awareness programmes through its field offices in
collaboration with CGTMSE, SIDBI, SLBCs, banks, MSME associations and State/UT
governments to promote the scheme.
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:
i.
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.
ii.
Annual
Guarantee Fees (AGF) structure revised with 50% reduction in standard rate to
as low as 0.37% per annum.
iii.
Enhanced
extent of guarantee for MSEs led by special category including women led MSEs.
iv.
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.
v.
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.
vi.
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.
vii. 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.
viii. 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 on 23 July, 2026.