The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a government scheme in India that provides credit guarantees to financial institutions to encourage them to extend collateral-free loans to micro and small enterprises (MSEs).
The CGTMSE acts as a guarantee provider for the loans provided by banks and other eligible lending institutions, thereby reducing the risk for the lenders. It enables MSEs to access credit without the need for collateral or third-party guarantees, facilitating their growth and development
Under the CGTMSE scheme, eligible MSEs can avail loans up to a certain limit (currently up to Rs. 5 crores) from member lending institutions. The CGTMSE provides a guarantee cover on the default portion of the loan amount, thereby mitigating the risk for the lender. In case of default by the MSE borrower, the CGTMSE compensates the lending institution to a certain extent as per the guarantee cover provided.
