Credit Guarantee Fund Scheme for Micro and Small Enterprises was launched on 30 August 2000 to ensure better flow of credit to micro and small enterprises by minimizing the risk perception of financial institutions and banks. It is operated by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) through the Trust’s member lending institutions.

The Scheme covers collateral free credit facility (term loan and/ or working capital) extended by eligible lending institutions to new and existing micro and small enterprises up to Rs. 100 lakh per borrowing unit. The Scheme provides a maximum guarantee cover up to 85 percent of the credit.

During the current financial year (till 15.8.2011), the Trust has approved 80641 proposals for guarantee cover for aggregate loan amount of Rs. 4504.26 crore.

There is no proposal to set up Special Economic Zone for MSME entrepreneurs separately. However, as per provisions of Special Economic Zone (SEZ) Act, 2005, a SEZ may be established wherein micro, small and medium enterprises (MSMEs) can also be set up.

The Government is implementing various schemes/programmes for the promotion and development of micro, small and medium enterprises (MSMEs). The major schemes include Credit Guarantee Scheme, Credit Linked Capital Subsity Scheme, Performance and Credit Rating Scheme, Cluster Development Programme, National Manufacturing Competitiveness Programme and Prime Minister’s Employment Generation Programme.

This information was given by the Union Cabinet Minister for Micro, Small and Medium Enterprises, Shri Virbhadra Singh in a written reply to a question in the Lok Sabha today.

Source: Press Information Bureau
Date: August 25, 2011