The CGTMSE scheme is a credit scheme initiative by the government of India. It enables micro and small businesses to avail loans without a collateral and offers credit guarantee to lenders. The CGTMSE new member registration process is a straightforward process and can be done online by:

• Member Lending Institutions that want to register with CGTMSE
• MSEs looking to avail funding for growth and expansion (Also read: MSME classification in India – Difference between micro, small and medium enterprises)

Understanding the CGTMSE scheme eligibility is critical for entrepreneurs and MLIs aiming to avail and provide funding under the scheme.

Here, we take a look at the CGTMSE loan for new businesses, the process, documents required, eligibility, benefits and more to enable MSMEs avail financial support and MLIs to provide funds.

CGTMSE new member registration process – A step by step guide

MLIs can register as a new member with the CGTMSE. Micro and small enterprises (MSEs) can also register under the CGTMSE scheme to avail loans to achieve their business goals and propel stability.

Currently, the credit facility limit has been extended to ₹5 crores (from April 2023 onwards) for MSEs, with MLIs getting backing and coverage for up to 75% to 85% of the loan amount. This reduces the risk for Member Lending Institutions and also gives MSEs the scope to borrow funds without collaterals or third-party guarantors.

Also read: MUDRA loan – Eligibility, benefits, documents required

New member registration process – For Member Lending Institutions (MLIs)

Member Lending Institutions (MLIs) such as scheduled commercial banks play a vital role in facilitating the CGTMSE scheme by making funds available to micro and small businesses. A lender will have to get into an agreement with the CGTMSE Trust before it can offer funds under the scheme.

Here’s are the simple steps to MLI CGTMSE registration:

• Visit the official CGTMSE portal
• Download the ‘Download Undertaking’ CGTMSE application form to begin the process: //www.cgtmse.in/Home/VS/91
• Fill in the undertaking and submit it to the registered office (Mumbai) of the CGTMSE Trust on a stamp paper of appropriate value
• Ensure to attach the following additional documents for the member registration process: (1) Annual reports of the last 3 years (2) Service office address and list of all the offices/branches that will operate the Credit Guarantee scheme under CGTMSE (can be submitted later after registration) (3) Name, designation and signature of all the officers to operate the scheme (can be submitted later after registration)

In case of Regional Rural Banks (RRBs), the application process remains the same. However, additional documents are required involving financial statements and operational history.

*Image for representation purpose only. Not actual.

New member registration online – For MSEs seeking loans

As a micro and small business, you can apply for a loan under the CGTMSE scheme. Since the scheme operates through registered MLIs, you will have to visit a MLI branch physically or apply online on the bank/NBFC’s website (if applicable). Here are some of the steps you will have to follow to get a CGTMSE new member registration for fund borrowing.

• Visit the CGTMSE website and check the list of Member Lending Institutions authorised to offer funds under the scheme: //www.cgtmse.in/Home/VS/49
• Check the MLI website or visit the bank/MBFC branch to get the CGTMSE application form and other information
• Fill in the form and apply for the loans with all required details and documents
• Await the response from the lender (Note – The MLI will assess the loan application and apply to the CGTMSE for coverage; the CGTMSE will check creditworthiness and requirements and approve/disapprove the credit guarantee)
• Disbursement of loan will be done by the MLI with details on repayments and consequences of default
• Payment of service charges and guarantee fees (1% – 2% and risk premium) will have to be paid by the applicant

Also read: MSME loan schemes – Popular government loan schemes for MSME businesses

Who is eligible under CGTMSE?

All scheduled banks in India – public and private sector banks, RRBs, foreign banks, small finance banks, financial institutions, micro finance institutions, scheduled urban co-operative banks and other Co-Op banks can register as a new member under CGSTMSE scheme. However, there are some basic registration criteria for various MLI types.

Registration criteria for Small Finance Banks:

• ₹100 crores minimum net worth
• Minimum credit rating of BBB and above (or equivalent)
• CRAR should be as prescribed by the RBI
• 3 years of net profit for the previous years
• CRR/SLR compliance as per RBI required

Registration criteria for Scheduled Urban Co-operative Banks:

• ₹750 crores and above continuous DTL for a year
• 12% minimum CRAR
• 5% or less gross NPA
• 3+ previous years continuous net profit
• CRR/SLR requirements compliance

Registration criteria for Micro Finance Institutions:

• 36+ months of operations as a MFI
• Up to MfR5 prudential grading
• 15% and above CRAR
• 10:1 or less debt to equity ratio
• 5% or less AUM for portfolios at risk > 90 days
• ₹100 crores minimum asset size

For the comprehensive list of eligibility for new member registration eligibility criteria, visit the CGTMSE website or Trust office.

Can new business apply for CGTMSE?

New and existing Micro and Small enterprises/business in the services and manufacturing sector can apply for CGTMSE loans. Those enterprises engaged in agriculture, or self-help groups (SHGs) cannot apply for the loan.

MSEs such as proprietorships, limited liability partnerships, partnerships, private limited company, or registered company are covered under the scheme.

*Image for representation purpose only. Not actual.

What are the documents required for CGTMSE?

The documents for CGTMSE member registration varies depending on the type of lender. In general, it consists of financial documents, contact information and details of geographical operations, and other service and performance related details.

List of documents required for CGTMSE for Banks:

• Latest annual reports (usually of the last 3 years)
• CGTMSE scheme Undertaking by MLI – Signed and stamped
• All compliance requirements for MLI registration

List of documents required for CGTMSE for NBFCs:

• Application form – CGS II – NBFC
• Compliance document
• Forwarding letter
• Undertaking

All of these documents can be downloaded from the CGTMSE website and filled in: //www.cgtmse.in/Home/VS/56

CGTMSE documents for Regional Rural Banks:

• Last 3 years annual reports
• Details of geographical area of operations
• Additional funding details – Average size of loan offered, percentage of standard assets to total assets, performance of recovery made, ratio of capital adequacy etc.

How long does CGTMSE take to process?

Time required to process CGTMSE application varies based on the creditworthiness of the borrowers, loan amount requested, documents submitted and other factors.

However, once the sub-debt is sanctioned, the MLI bank/NBFC can login and apply for the guarantee coverage on the CGTMSE portal.

Once the application form is received and fees are paid, the actual guarantee is provided by CGTMSE within 24 hours.

*This article is for information only. Please visit the CGTMSE website for more information or visit your nearest MLI bank or NBFC for updates and details o CGTMSE loan application.