Credit Guarantee Scheme (CGS) has been launched by Ministry of Micro, Small and Medium enterprises, a unit of Government of India. To operationalise the scheme, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). Under this scheme loans are provided without obtaining any collateral security or any third party guarantee.
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The purpose of the scheme is to facilitate flow of credit in a smooth manner to micro, small and medium enterprises.
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The main objective is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed.
The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency.
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Salient features of CGTMSE scheme are given below:
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All scheduled commercial banks and specified Regional Rural Banks, NSIC, NEDFi, SIDBI, & NBFCs which have entered into an agreement with the Trust for the purpose.
However, the eligible lending Institutions, on entering with an agreement with CGTMSE, become Member Lending Institutions (MLIs) of CGTMSE.
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New as well as existing Micro and Small Enterprises are eligible.
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