Delhi Govt, CGTMSE Partner To Offer Collateral-Free Loans Up To Rs 10 Cr To Small Businesses

New Delhi, Jan 31 (KNN) The Delhi government has signed a memorandum of understanding (MoU) with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to provide collateral-free loans of up to Rs 10 crore to new and existing micro and small enterprises (MSEs).

Shared Credit Guarantee Model

Under the Delhi Credit Guarantee Scheme, the loan guarantee will be jointly shared by the Delhi government and CGTMSE. CGTMSE will provide a guarantee cover of 75–90 per cent of the loan amount, while the remaining portion will be backed by the Delhi government.

According to the Chief Minister’s Office (CMO), this structure will result in government-backed guarantees covering up to 95 per cent of the loan value, reducing lenders’ risk exposure to about 5 per cent and encouraging banks to extend credit to smaller businesses.

Boost to Collateral-Free Credit

Chief Minister Rekha Gupta said the initiative aims to improve access to finance for entrepreneurs who lack collateral. She noted that many small and first-time entrepreneurs face difficulties in securing bank loans despite viable business plans.

The scheme is expected to ease credit constraints, lower lending risks for financial institutions, and support entrepreneurship and job creation in the city.

Coverage and Funding

The scheme will cover MSEs across manufacturing, services, retail, education, and skill development sectors. A dedicated fund of Rs 50 crore has been set aside to support the guarantee mechanism. The government estimates that this corpus could enable banks to extend loans of up to Rs 2,500 crore, with scope for expansion if required.

Target Beneficiaries

The Delhi government plans to initially cover around one lakh beneficiaries, with no upper limit on overall coverage. Additional support will be provided to first-time entrepreneurs and women-led enterprises.

Expected Impact

Officials said the initiative is expected to generate employment and strengthen Delhi’s micro and small enterprise ecosystem by improving access to institutional credit.

(KNN Bureau)