The renewed loan guarantee program will come into effect from tomorrow
A revamped credit guarantee scheme for Indian micro and small businesses will come into effect from Saturday, with annual guarantee fees for loans up to Rs 1 crore reduced from the peak of 2% to 0.37%, reducing the overall cost of small business credit.
The collateral cap limit has also been increased from Rs 2 crore to Rs 5 crore. The Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) has issued guidelines in this regard.
“The collateral cap limit has been raised from Rs 2 crore to Rs 5 crore. For the settlement of claims regarding outstanding loan collateral up to Rs 10 lakh, the initiation of legal proceedings will no longer be necessary,” said the Ministry of MSMEs. said.
In the 2023-24 Budget, Finance Minister Nirmala Sitharaman announced the overhaul of the Credit Guarantee Scheme for Micro and Small Enterprises effective April 1, 2023, with an infusion of Rs 9,000 crore to the corpus to enable secured credit without additional collateral of Rs 2 lakh crore and reduction in cost of credit by about 1%.
Hence, the corpus of the Credit Guarantee Fund Trust for Micro & Small Enterprises was infused with a sum of Rs 8,000 crore on March 30, 2023.
CGTMSE has created a new landmark by touching the milestone figure of approving guarantees worth Rs 1 lakh crore in the financial year 2022-23, the MSME ministry said.
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