CGTMSE: SIDBI’s credit guarantee scheme sees 92% jump in approved loan applications; this many settled

Credit and Finance for MSMEs: The credit guarantee fund trust for micro and small enterprises (CGTMSE), which operates the credit guarantee scheme for MSEs, had approved 8,38,947 loan applications in FY20, up 92 per cent from 4,35,520 applications in FY19. The number of applications approved by CGTMSE in FY20 was also the highest in the preceding five financial years, according to the MSME Ministry’s data. Operated by the government and SIDBI — the principal financial institution focusing on MSMEs, the CGTMSE scheme had settled 39,937 applications involving Rs 880.31 crore out of nearly 8.39 such applications involving over Rs 45,215 crore during FY20. This had increased from 36,606 claims involving Rs 764.21 crore out of 4.35 lakh applications in FY19.

Under the CGTMSE scheme, which provides credit guarantee to financial institutions to provide collateral-free loans to small businesses, the government had enhanced the loan disbursal limit from Rs 1 crore to Rs 2 crore, former MSME Minister Giriraj Singh had said in February 2019, according to a statement by the ministry. Moreover, the corpus of the scheme was also increased from Rs 2.5 lakh crore to Rs 7.5 lakh crore rupees while 18 lakh people had become entrepreneurs in the last four years, due to the scheme, the minister had said.

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Among the leading states, which saw the highest number of claims settled in FY20, were Uttar Pradesh (6,157) followed by Maharashtra (5,401), Karnataka (3,526), Tamil Nadu (2,824), Kerala (2,730), etc. In terms of leading lenders approving maximum cases including Bajaj Finance (1.74 lakh), Bank of Baroda (90,775), Union Bank of India (88,530), Punjab National Bank (49,700), Lendingkart (41,952), etc., the data available on MSME Dashboard by the ministry showed.

Importantly, SIDBI had announced the launch of the online portal — Udaan for MSEs in August 2020 to help businesses get provisional guarantee certificates to avail collateral-free loans from SIDBI’s member lending institutions including banks and non-banking financial companies. The portal allowed small businesses to also check their “sustainability for guarantee-based loan products” from MLIs while CGTMSE helped in the “selection of eligible borrowers”, SIDBI Chairman and MD Mohammad Mustafa had said in a video conference. The eligible MSEs could then approach MLIs of their choice for securing credit with the provisional guarantee.