Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE): A real stimulator of Small Businesses in India: A Study

Abstract

A trust, namely Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), is formed by the ministry of MSME, GOI and Small Industrial Development Bank of India in July 2000 to provide guarantees in respect of credit facilities provided by lending institutions without any collateral securities/ third party guarantees to the new MSMEs. Primary objective was to solve the problem of bankability of new SMEs as they do not have strong capital base and lack of credit facilities due to collateral securities etc. A total of over 43 lakh guarantees has been accorded approval for Rs. 2.22 lakh crore by CGTMSE trust cumulatively over the last 20 years (Public Accounts Committee, 2021-22, Forty fourth Report) since its inception. Union Finance Minister made a provision with an infusion of Rs 9,000 crore to the corpus for the revamping of the Credit Guarantee Scheme for Micro & Small Enterprises with effect from 01.04.2023, to enable additional collateral-free guaranteed credit of Rs. 2 lakh crore and the reduction in the cost of the credit by about 1 per cent (Union Budget 2023-24). In our study we intended to see the role of the CGTMSE in the number of accounts guarantees and borrowed funds sanctioned under the Credit Guarantee Fund scheme for new MSME; the approved fund; slab-wise sanctioned fund in different states under different schemes of CGTMSE in 2023-24. We also want to look at the real scenario of registered MLI; different banks as MLIs in terms of the amount sanctioned under different scheme and also to observe the Position of top NBFCs as MLIs during FY 2023-24.