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Refurbished Loan Guarantee Scheme
Refurbished Loan Guarantee Scheme
Tags: Gig Economy Economy WTO WTO Public Stockholding MSP Economic Growth Masala Bond Environmental Performance Index Forecast of Economic Growth Functions of the Finance Commission
March 31, 2023 15:49 IST
A much-improved scheme of loan or, credit guarantee pertaining to the country’s micro and small enterprises is slated to come into force from 1st April, 2023. The salient features are:
1. The most striking feature of this scheme includes a yearly guarantee fee for loans till Rs 1 crore getting slashed from the peak 2 per cent to 0.37 per cent. This can substantially help in minimising the overall credit cost for many small businesses.
2. The margin on ceiling for guarantees has also been increased from Rs 2 crore to Rs 5 crore.
3. All guidelines in this regard have been issued by the Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE). CGTMSE is a trust that was established by the Ministry of Micro, Small and Medium Enterprises (MSME) and Small Industries Development Bank of India (SIDBI) on August 30, 2000 for implementing Credit Guarantee Fund Scheme for micro and small enterprises.
4. The corpus of CGTMSE is maintained and contributed by the central government and SIDBI. Coverage under the scheme lasts for the agreed period of composite credit/term loan.
5. For working capital, the cover of guarantee is 5 years or a complete 5 year block.
The The ministry of MSME further informed that:
1. The initiation of court proceedings is no longer required for settlement of claims related to guarantees for unpaid loans up to Rs 100,000.
2. During the budget speech of 2023-24, it was announced that the credit guarantee scheme pertaining to micro and small enterprises will be revamped from 1st April, 2023 along with an infusion of a corpus amount of Rs 9,000 crore.
3. This can help in creating an additional guaranteed and collateral-free credit worth 2 lakh crore while minimising the credit cost by almost 1 percent.
As per planning:
1. a sum of Rs 8,000 has been infused into the corpus of Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) on March 30, 2023.
Thus, individuals/proprietorship, partnership, LLP, registered and private limited companies are eligible to get the benefits under this scheme. The ministry of MSME also informed that CGTMSE created a new record by registering a milestone figure of approving guarantees. During the financial year 2022-23, this figure was worth Rs 1 lakh crore. Thus, lending institutions can always register with CGTMSE to avail of its benefits by submitting an undertaking on a stamp paper and submitting some required documents while registering.
Source: The Hindu