– Certain trust such as Credit Guarantee Fund Trust has been set up by Ministry of MSME, Government of India and SIDBI, so that there won’t be any breakage in the flow of credit to the MSE sector without any interference from the third party. The scheme is solidified on the basis that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed.
Cluster based approach to lending is intended to provide a full-service approach to cater to the diverse needs of the MSE sector which may be achieved through extending banking services to recognised MSE clusters.
The banks have, therefore, been advised to treat it as a thrust area and increasingly adopt the same for SME financing. Banks are always asked to take appropriate steps so that the flow of credit is smoothly done to the identified clusters of micro and small entrepreneurs from the Minorities Communities residing in the minority concentrated districts of the country.
The CGTMSE would provide cover for credit facility up to Rs. 100 lakh which have been extended by lending institutions without any collateral security. A nominal annual fee is charged by the CGTMSE to avail of the guarantee cover.