On February26, 2020 the Governmentof India(GOI) has decided to include non-scheduled urban & district central cooperative banks in 3 schemes namely Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE),Credit Linked Capital Subsidy Scheme (CLCSS) & Interest Subvention Scheme to make easy access to finance for the Ministry of Micro, Small & Medium Enterprises MSME sector.Key Points:
- The Non Banking Financial Company(NBFCs) has about 13% of share in MSME lending & extends hassle-free credit to MSME sector, mainly in the remote areas.
- The Insertion of NBFCs ,scheduled and non-scheduled urban cooperative banks and district central cooperative banks in 3 schemes will spread the outreach & easy access to credit.
- After the insertion the borrower will have the option to choose the lender according to their convenience & approach which creates uniformity & competitiveness among the lenders in the financial sector.
Brief on 3 schemes
i.Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE):
On August 30, 2000 the scheme was launched by GOI.The Ministry of Micro, Small and Medium Enterprises, GOI & Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises. The corpus of CGTMSE is given by GOI and SIDBI. 75% of the loan amount to the bank is guaranteed by the Trust Fund.
ii.Credit Linked Capital Subsidy Scheme (CLCSS):
In October 2000 the scheme was launched by the GOI for technology upgradation.Scheme provides an upfront capital subsidy for upgrading technology for new or existing Micro, Small and Medium Enterprises.The Objective is-to provide technologically advanced equipment to MSMEs, enhance latest technology by upgrading MSMEs plant & machinery & aid in their expansion if needed.
iii.Interest subvention scheme:
With effect from Kharif 2006-07 the policy came into effect . The scheme is introduced by GOI & aims to provide short term credit to farmers at subsidized interest rate. The interest subvention is given to Public Sector Banks (PSBs), Private Sector Banks, Cooperative Banks & Regional Rural Banks (RRBs) on use of own funds & to NABARD for refinance to RRBs & Cooperative Banks.