(MENAFN- KNN India) The Odisha government has asked the Small Industries Development Bank of India (SIDBI) to give its view on expanding coverage under Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE).
Last month, the state MSME (micro, small & medium enterprises) department, in proposal to SIDBI, conveyed the state government's readiness to pump in Rs 100 crore for CGTMSE. The department wanted SIDBI to introduce a special fund for MSMEs in the state, according to a media report.
P S Mishra, additional secretary, MSME wrote to chairman cum managing director of SIDBI, seeking the micro units lender's view on the issue.
The Union ministry of MSME and SIDBI have set up the CGTMSE to operationalise the Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSME sector. Under the scheme, collateral free loans are provided to MSMEs.
The main objective of the scheme is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed.
Under the scheme, the guarantee cover available is restricted to credit of Rs one crore even though credit extended is more than Rs one crore to an eligible borrower. CGTMSE provides guarantee cover up to 75 per cent of the amount in default subject to a maximum of Rs 62.50 lakh.
Under CGTMSE, a corpus fund of Rs 2500 crore has been created for coverage of loan advances to MSMEs. In order to increase the coverage under CGTMSE, the Union MSME ministry has urged all states to contribute Rs 100 crore each. In the meantime, the Kerala Finance Corporation has contributed Rs 10 crore to the CGTMSE.
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