What is Credit Guarantee Scheme? How is it beneficial for small businesses and traders

Credit Guarantee Scheme: Credit Guarantee Funds for Micro and Small Enterprises (CGTMSE), launched in the year 2000, is a loan offered by the Ministry of Medium, Small and Micro Enterprises (MSME) in collaboration with Small Industries Development Bank of India (SIDBI). This is a government-backed loan scheme for small businesses and traders. It provides credit guarantees to various micro-financial institutions, like small finance banks, and non-banking financial companies, which give loans to MSMEs. Credit Guarantee Scheme (CGS) was launched on August 30, 2000, and became operational with effect from January 1, 2000, to strengthen the credit delivery system. The scheme also aims to facilitate the flow of credit to the MSE sector, and create access to finance for various small- and medium-scale business owners.

The reform in the Credit Guarantee Scheme is part of the government's efforts to strengthen the MSME sector, Prime Minister Narendra Modi said in a statement appreciating the scheme. The Prime Minister said in a tweet, "This is a part of our government's efforts to strengthen the MSME sector." Narayan Rane, Union Minister for Micro, Small, and Medium Enterprises, tweeted that as part of the continuous efforts to strengthen the MSE sector, the Credit Guarantee Scheme has been revamped to increase the flow of credit to MSEs.

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