Here are some key details about the CGTMSE scheme:

Objective: The primary objective of CGTMSE is to facilitate credit flow to micro and small enterprises by providing credit guarantee coverage for collateral-free loans extended by eligible financial institutions.

Coverage: The scheme covers both new and existing micro and small enterprises, including those in the manufacturing as well as service sectors. MSEs engaged in activities like manufacturing, trading, services, and agriculture-related activities are eligible for coverage under CGTMSE.

Collateral-free Loans: CGTMSE provides a credit guarantee cover for collateral-free loans up to a certain limit. This means that MSEs can avail loans without providing any tangible collateral or third-party guarantee, making it easier for them to access credit.

Guarantee Coverage: Under CGTMSE, the guarantee coverage varies based on the amount of the loan. Generally, the guarantee cover is provided for a portion of the credit facility, typically ranging from 75% to 85% of the sanctioned amount.

Eligible Lenders: The scheme is available through eligible financial institutions such as scheduled commercial banks, regional rural banks, select financial institutions, and small finance banks, among others.

Eligible Borrowers: MSEs with a project cost or credit facility up to a certain limit are eligible for coverage under CGTMSE. The definition of micro and small enterprises is based on their investment in plant and machinery or equipment, depending on the sector they belong to.

Premium Payment: MSEs availing loans under the CGTMSE scheme are required to pay a one-time guarantee fee to the trust. The fee is based on the amount of the credit facility sanctioned and is typically calculated as a percentage of the loan amount.

Repayment Period: The repayment period for loans covered under CGTMSE may vary based on the nature of the project, business cycle, and other factors. Generally, borrowers are provided with flexible repayment terms to suit their cash flow requirements.

Claim Settlement: In case of default by the borrower, the lending institution can file a claim with CGTMSE for the guaranteed amount. Upon verification and approval, CGTMSE settles the claim with the lender, thereby mitigating the credit risk associated with lending to MSEs.

Operational Guidelines: The operational guidelines and procedures for implementing the CGTMSE scheme are laid down by the trust and periodically revised based on feedback and evolving market conditions.

Overall, the CGTMSE scheme plays a crucial role in promoting entrepreneurship and supporting the growth of micro and small enterprises by facilitating access to finance and reducing the risk for lenders. which contributes to job creation, income generation, and economic development.