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Restructuring of CGTMSE to help MSMEs, encourage banks to offer loan: SIDBI Chairman

Updated: Feb 21, 2018 05:44:43am
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Restructuring of CGTMSE to help MSMEs, encourage banks to offer loan: SIDBI Chairman

New Delhi, Feb 21 (KNN) The newly restructured Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is designed in a way that it helps the Micro and Small Enterprises on one hand and at the same time encourage banks to offer loans to the sector, Small Industries Development Bank of India (SIDBI) said.

Talking to KNN, Mohammad Mustafa, Chairman & Managing Director of Small Industries Development Bank of India (SIDBI) along the sidelines of “Rebooting CGTMSE” event said that the new structure is going to be a win-win for both the MSMEs as well as the bank.

Responding to the question as to if the proposed expansion of CGTMSE ambit is a realizable target considering the corpus constraint, Mustafa said that the corpus isn’t a bottleneck anymore and the government has taken into consideration the demands of the sector.

Also with regard to the banks not very open to lend large ticket size without collateral, Mustafa said that the new structure is formulated in a way that on one hand it benefits the MSMEs, at the same time it is financially viable for the banks.

Also with the provision of allowing partial collateral to increase guarantee cover, more industries will be able to take advantage.

“It is in the interest of bank, if they guarantee, the capital charge on them goes down”, he said responding to the question as to if the banks would be taking it up seriously.

During the event the key changes, along with a new logo of the trust, several key changes in the CGTMSE were unveiled.

Under the changed rule, loans with Partial Collateral Security have been allowed under CGS.

“This apart from bringing a large chunk of loans under the ambit of credit guarantee would also help in promoting disciplined credit behaviour,” said an official release. It has also been decided to increase the extent of guarantee coverage for proposals above Rs 50 lakh. (KNN/DA)

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