On 31st December 2016, Prime Minister announced that coverage under Credit Guarantee Scheme will be increased to Rs.2 crores. Till now, the coverage under CGTMSE is Rs.1 crores under which Micro, Small and Medium Enterprises can get collateral free loans. CGTMSE (Trust) has now issued circular on 9th January 2017 to increase the limit of CGTMSE coverage to Rs.2 crores in terms of PM’s annoucement.
[Read: All about CGTMSE Scheme – Eligibility, coverage, procedure]
Highlights of the circular are as under:
- CGTMSE coverage Limit increase to credit facilities of upto Rs.200 lacs for Scheduled Commercial Banks and select Financial Institutions and Rs.50 lacs for Regional Rural Banks and Financial Institutions.
- Proposals sanctioned on or after 1st January 2017 will be eligible for increased limit.
- Enhancements in Term Loan/ Working capital limits on or after 1st January 2017 are also eligible for increased coverage limit.
- Limit increase in respect of both, term loan and working capital limits.
- Maximum extent of guarantee above Rs.50 lacs and upto Rs.200 lacs will be 50% of amount in default subject to a maximum of Rs.100 lacs.
- All proposals for sanction of guarantee approvals for credit facilities above Rs.50 lacs upto Rs.200 lacs will have to be rated internally by MLI and should be of investment grade.
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