What is CGTMSE?

What is CGTMSE?

  • CGTMSE refers- Credit Guarantee Fund Trust for Micro and Small Enterprises.
  • The logo of CGTMSE is “colourful flying bird” which depicts giving wings to entrepreneurial zeal of millions of youths who are having bankable business ideas but lack collateral security and/or third-party guarantee to access credit from formal source.
  • CGTMSE provides guarantee to enable them access credit leading to setting up viable micro and small enterprises. Thereby transforming them from job seekers to job providers.

Objectives of CGTMSE

Availability of bank credit without the hassles of collaterals/third party guarantees is a major source of support to the first-generation entrepreneurs who wants setting up a unit of their own Micro and Small Enterprise (MSE).

Keeping this objective in view, Ministry of Micro, Small & Medium Enterprises (MSME), Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector.

To operationalise the scheme, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

Category (including trading activity)

Maximum extent of Guarantee coverage (where guaranteed credit facility is..)

Up to ₹ 5 lakhs

Above ₹ 5 lakh & up to ₹ 50 lakh

Above ₹ 50 lakh & up to ₹ 500 lakh

Micro Enterprises




MSEs located in North East Region (incl. Sikkim, UT of Jammu & Kashmir and UT of Ladakh)




Women entrepreneurs / SC/ST entrepreneurs / MSEs situated in Aspirational District / ZED certified MSEs / Person with Disability (PwD) / MSE promoted by Agniveers




All other category of borrowers




Note: The extent of guarantee coverage for MSEs situated in Identified Credit Deficient Districts (ICDD) is additional 5% over and above the applicable guarantee coverage wef December 15, 2023(i.e for guarantee of 75%, the coverage would be 80%, for 80% it would be 85% and for 85% it would be 90%).

Guarantee will commence from the date of payment of guarantee fee and shall run through the agreed tenure of the term credit in case of term loans / composite loans and for a period of 5 years where working capital facilities alone are extended to borrowers, or for such period as may be specified by the Guarantee Trust in this behalf.

Frequently Asked Questions (FAQ)

Which type of borrowers can be covered under the Scheme?

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Agriculture, Self Help Groups (SHGs), etc.

Whether Borrowers from all service sector enterprises are eligible under the Scheme?

As of now, all activities that come under service sector as per MSMED Act, 2006 are eligible for coverage under the scheme.

Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme?

Yes. Small road and water transport loans are eligible for guarantee cover.

Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower?

Under the Guarantee Scheme, a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution. However, in respect of loans up to 5 lakh, CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover. IT Pan No. is to be indicated in respect of credit facility above 5 lakh. It is mandatory to obtain Udyam Registration Number of every borrower and feed it in the system at the time of submission of new application .

Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE?

Yes, existing credit facilities can be covered provided the credit facility was not restructured/remained in SMA2 status in last 1 year from the date of submission of application. In case, collateral security obtained, the unsecured portion can be covered under “Hybrid Security” product where the MLIs is allowed to obtain collateral security for a part of the credit facility, whereas the remaining part of the credit facility, up to a maximum of 500 lakh, can be covered under Credit Guarantee Scheme of CGTMSE.

Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution?

Credit facilities can be extended by more than one bank and/or financial institution jointly and/or separately to eligible borrower up to a maximum limit of 500 lakh per borrower subject to ceiling amount of individual MLI or such amount as may be specified by the Trust. However, sharing of securities will not be permitted.

Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme?

Yes, joint financing by a financial institution (e.g. SIDBI, NSIC, and NEDFi) and Commercial bank can be covered under the scheme. For e.g. MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank. However, sharing of securities will not be permitted.

Whether credit facility extended to self-help group can be covered under the scheme?


See also….
Micro Small & Medium Enterprises


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