Under this scheme, MSMEs borrowers with up to Rs 25 crores of total borrowing can avail an additional 20 percent of the loan outstanding from banks, NBFCs, and other financial institutions (FI).
CGTMSE was set up by the government and the Small Industries Development Bank of India (SIDBI) to ensure availability of bank credit without the hassle of collateral or third-party guarantee to MSMEs.
Since these special liquidity facility loans are not exclusive to MFIs or smaller NBFCs, the weaker ones in the lot will still be last in the queue for funds.
The changes will allow state-run banks to purchase pooled assets from financially sound NBFCs and HFCs.
Moneycontrol's Shraddha Sharma talks to Parnika Sokhi about the partial credit guarantee scheme and why it has failed to take off.
The new policy will also have a state government-level credit guarantee scheme, he said, adding the government would like to work out a system wherein it is able to guarantee each and every SME application posted before the bank
The Finance Ministry will move a Cabinet note in 7-10 days to launch Credit Guarantee Scheme proposed in the Budget to ensure better flow of education loans to deserving students.