Rs 5 Crore MSME Loan for Agniveers: CGTMSE Guarantee Coverage Explained

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme plays a pivotal role in supporting micro and small enterprises (MSEs) by providing credit guarantees to lenders without requiring collateral. One of the notable inclusions under this scheme is support for MSEs launched and operated by Agniveers—youth selected under the Agnipath recruitment scheme, introduced in 2022 to serve in India’s armed forces.

Under the CGTMSE scheme, MSEs can avail of credit guarantee coverage of up to 85%, depending on the type of enterprise and the loan amount. For MSEs in specific regions such as the North East (including Sikkim, Jammu & Kashmir, and Ladakh), the scheme offers 80% coverage for loans up to Rs 50 lakh and 75% for loans up to Rs 5 crore. The scheme was also expanded in late 2022 to include MSEs led by women, SC/ST entrepreneurs, Zero Defect Zero Effect (ZED)-certified enterprises, and MSEs located in aspirational districts.

For MSEs promoted by Agniveers, the CGTMSE scheme provides a maximum credit guarantee coverage of up to 85% for loans up to Rs 5 crore. This enhanced coverage is also applicable to SC/ST entrepreneurs, ZED-certified MSEs, enterprises in aspirational districts, and persons with disabilities (PwD).

To illustrate how this works: if an Agniveer-led MSE secures a loan of Rs 2 crore and is unable to repay 50% of the amount, CGTMSE would settle 85% of the amount in default, providing significant relief to the lending institution.

The CGTMSE scheme has been instrumental in extending credit support to MSEs across the country. In FY24, the scheme approved credit guarantees worth Rs 2 lakh crore—marking a record in a single financial year—compared to Rs 1.04 lakh crore in FY23 and Rs 56,172 crore in FY22. The government aims to extend Rs 5 lakh crore in credit guarantees over the next two years. As of September 2024, the scheme had already reached Rs 1 lakh crore in guarantees for the fiscal year. Dr. Rajneesh, Additional Secretary and Development Commissioner (MSME), noted at a recent FICCI-organized MSME conference that the government has issued credit guarantees worth Rs 4 lakh crore in the past two years, with a goal of ramping up to Rs 5 lakh crore in the near future.

Disclaimer: This article is for informational purposes only and should not be considered as financial or legal advice. Readers are encouraged to consult with professionals or official government resources for detailed guidance on the CGTMSE scheme and its applicability.