CGTMSE Scheme: Ceiling of Coverage Increased to Rs. 500 Lakh

by | Feb 21, 2024

CGTMSE Scheme: Maximum Coverage Raised to Rs. 500 Lakhs

The Indian economy is supported by micro and small businesses (MSEs). However, because they frequently lack collateral or credit history, small companies frequently struggle to get loans from conventional financial institutions. (CGTMSE) the scheme was created by the Indian government to address this issue.

 (SIDBI) and (MSMEs) introduced the CGTMSE program in August 2000. By ensuring a percentage of the loan amount, the initiative aims to give micro and small businesses access to credit without the need for collateral.

A lender (bank or finance institution) gives loans to MSEs within the CGTMSE scheme without requiring any kind of security. Any micro or small enterprise engaged in manufacturing, trading or service activities can avail of the benefits of the CGTMSE scheme. The scheme covers both new and existing enterprises, including those in the retail trade, agriculture, and allied activities.

According to a notification issued by the Indian government on March 31, 2023, there have been substantial changes made to the (CGTMSE) program. The CGS-I scheme’s coverage ceiling has been raised from Rs. 200 lakhs to Rs. 500 lakhs as a result of the notification with reference number CGTMSE/44/293 and circular number 220/2022-23.


The CGS-I scheme provides credit guarantees for micro and small enterprises (MSEs) for the credit facilities extended by eligible Member Lending Institutions (MLIs). The coverage under the CGS-I scheme has been increased from Rs. 200 lakhs to Rs. 500 lakhs per borrower

The revised modifications will be applicable for all guarantees approved on or after April 01, 2023, including enhancement in the working capital of existing covered accounts. All other terms and conditions of the scheme shall remain unchanged.

The increase in the ceiling of coverage under the CGS-I scheme is a significant development that will benefit micro and small enterprises. It will enable these enterprises to access higher credit facilities without any collateral, thereby promoting entrepreneurship and creating employment opportunities. The CGTMSE scheme has been instrumental in supporting the growth of MSEs in India, and this modification will further strengthen its impact on the economy.

To be eligible for the CGTMSE scheme, the enterprise should have a good track record and creditworthiness. It should also have a viable project report, which is evaluated by the lending institution. The scheme is not available to enterprises engaged in speculative or illegal activities.

The premium for the guarantee covered under the CGTMSE scheme is borne by the borrower, and it varies according to the amount of the loan and the tenure of the loan. The premium rates are lower for women entrepreneurs and for enterprises located in the North-Eastern Region and the hilly states.

In conclusion, the CGTMSE scheme is a significant initiative by the Government of India to support the growth of SMEs in the country. By providing collateral-free credit and guarantee cover, the scheme has made it easier for SMEs to obtain loans from banks and financial institutions. The scheme has contributed significantly to the development of the SME sector and has played a vital role in promoting economic growth and employment generation in the country.

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