CGTMSE: 52% spike in FY22 loan guarantees as average ticket size jumped amid MSMEs’ post-Covid recovery

The scheme provides a guarantee to loans up to Rs 2 crore, of which up to 85 per cent is guaranteed by the government. There are 146 member lending institutions including banks and NBFCs under CGTMSE. To address the growing credit requirements of MSMEs through CGTMSE, Finance Minister Nirmala Sitharaman in her budget speech this year had announced that it will be revamped with the required infusion of funds. 

“This will facilitate additional credit of Rs 2 lakh crore for micro and small enterprises and expand employment opportunities,” Sitharaman had said. 

The government’s Credit Guarantee Scheme (CGS), which facilitates collateral-free credit flow to micro and small enterprises under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), has recorded a significant 52 per cent jump in loan guarantees in the financial year 2021-22, showed official data. Rs 56,172 crore guarantees were approved under the scheme in FY22, up from Rs 36,899 crore in FY21, indicating a jump in credit requirement for post-Covid business recovery. In comparison to pre-Covid FY20 guarantees approved worth Rs 45,851 crore, the jump in FY22 was 22.5 per cent.

“The jump has been because of an increase in the average ticket size from around Rs 6 lakh to near Rs 7 lakh as MSEs needed more capital to revive their businesses. We expect this growth to be maintained as we are trying to rework the scheme’s parameters to take it to more beneficiaries. There has been a proactive approach from our side to reach out to more lenders,” Sandeep Varma, Chief Executive Officer, CGTMSE

The Credit Guarantee Fund Trust for Micro and Small Enterprises(CGTMSE) scheme will thus help to address the growing credit requirements of MSMEs and help them in taking their business to the next level.

Source : https://www.financialexpress.com/