Generally, MSEs lack to offer collateral security and/or third-party guarantee to the lending institutions. Therefore, the Credit Guarantee Scheme of the CGTMSE is found to be a successful tool in facilitating MSEs to get the access to formal credit sources. But, it is necessary to strengthen efforts to reorient the lenders’ perspective from the age old collateral based lending to project viability, instil confidence on the part of their credit officers and branch managers & encourage to enhance the credit flow to MSEs, backed by a comfort of guarantee cover from CGTMSE.
In case of MSEs in the North East Region (NER), Ladakh and Jammu & Kashmir seeking bank loan up to Rs. 5 lakh and above Rs. 5 Lakh, the guarantee cover is available is up to 80 % and 75 % respectively. For Micro enterprises, the cover is 85% and 75% for loan up to Rs. 5 lakh and above Rs. 5 lakh respectively. Similarly for Women Entrepreneurs, SC/ST Entrepreneurs and other special categories of borrowers a vailing of bank loan of Rs. 5 lakh , the guarantee cover is 90 %, 85 % and 75 % respectively. Further, the guarantee cover ensures that, even if the business fails to repay the loan, the bank will recover nearly the total amount under the scheme. Hence, the lender remains assured when it approves a collateral free MSE loan...(To continue, open the magazine)