Assam government has launched the Assam Credit Guarantee Scheme this year to enable small businesses in the state to access formal credit without collateral. Effective from April 1, 2023, the state government has partnered with Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), jointly set up by the MSME Ministry and Small Industries Development Bank of India (SIDBI), to increase the flow of institutional credit to micro and small enterprises (MSEs) in the state.
According to ANI, member lending institutions which are essentially financial institutions registered with National Credit Guarantee Trustee Company Ltd. (NCGTC) will be eligible for under ACGS. The ACGS scheme is drawn along the lines of the Credit Guarantee Scheme (CGS-I for bands and CGS-II for NBFCs), with the only difference being the provision of 100 per cent guarantee coverage to MSEs.
"Under the Scheme, 75-85 per cent of the guarantee coverage or credit facilities will be provided by CGTMSE as hitherto depending upon the category of the borrower and the balance 25-15 per cent coverage shall be provided by the government of Assam, taking the overall guarantee coverage to 100 per cent", stated the letter by the state government.
It added that the claims of registered MLIs will be settled with the threshold limit of a maximum of 10 per cent of NPAs of the crystallized portfolio (the portfolio will be crystallized at the end of every financial year). In cases where their NPA exceeds the ten per cent limit, only the CGTMSE share of claims will be settled at 75-85 per cent.
The government's Credit Guarantee Fund for Micro and Small Enterprises (CGTMSE), introduced in July 2020, is among the most prominent initiatives taken to provide micro and small enterprises (MSEs) with collateral-free loans. The scheme was introduced with an initial outlay of Rs. 2,500 crore from the government and the Small Industries Development Bank of India (SIDBI) which was later strengthened with an additional Rs. 5,000 crore.
To further boost the scheme's coverage, finance minister Nirmala Sitharaman in her budget speech this year had announced an infusion of another Rs. 9,000 crore in the CGTMSE corpus, effective April 1, 2023.