Credit Guarantee Scheme Expanded to Rs 10 Crore Nationwide

The MSME Ministry has clarified that the Credit Guarantee Scheme for Micro and Small Enterprises (CGS via CGTMSE) provides collateral-free credit guarantees for MSE loans, including first-generation and women-led ventures, across the country. The guarantee ceiling was doubled from Rs 5 crore to Rs 10 crore from April 1, 2025, and the Annual Guarantee Fee has been cut by 50% to as low as 0.37% per annum to boost credit flow. The RBI’s Master Direction now requires banks not to take collateral for loans up to Rs 20 lakh to MSEs, strengthening access to finance for small units. In identified credit-deficient districts, CGTMSE offers a 10% discount on AGFs and an additional 5% guarantee coverage, with a Tamil Nadu-specific Tamil Nadu Credit Guarantee Scheme (TNCGS) providing enhanced support for manufacturing MSEs in the state. Banks’ performance and outreach are among the ongoing measures to raise awareness and widen the impact of CGTMSE, including for special-category MSEs such as those led by women. Acknowledging these steps, the government aims to broaden credit access for MSEs nationwide, including underserved areas and demographics.