New Delhi, Mar 31 (IANS): With a view to revamp the Credit Guarantee Scheme for Micro and Small Enterprises, Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) issued guidelines regarding reduction of annual guarantee fee for loans upto Rs 1 crore from a peak rate of 2 per cent per annum to as low as 0.37 per cent per annum.

In Union Budget 2023-24, Union Finance Minister Nirmala Sitharaman announced the revamping of Credit Guarantee Scheme for Micro & Small Enterprises with effect from April 1, 2023, with an infusion of Rs 9,000 crore to the corpus to enable additional collateral-free guaranteed credit of Rs. 2 lakh crore and the reduction in the cost of the credit by about 1 per cent.

Officials said that consequent upon this, many significant steps have been taken. The corpus of Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) has been infused with a sum of Rs 8,000 crore on March 30, 2023. CGTMSE has issued guidelines regarding reduction of annual guarantee fee for loans upto Rs 1 crore from a peak rate of 2 per cent per annum to as low as 0.37 per cent per annum. This will reduce the overall cost of credit to the Micro & Small Enterprises to a great extent.

Moreover, the limit on ceiling for guarantees has been enhanced from Rs 2 crore to Rs 5 crore. For settlement of claims in respect of guarantees for loan outstanding upto Rs 10 lakh, initiation of legal proceedings will no longer be required.

Officials said that CGTMSE created a new landmark by touching the milestone figure of approving guarantees worth Rs 1 lakh crore during FY 2022 - 23.