Give us a missed call on

+91 626 955 5606

Table of Contents

If you are a MSME business owner, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is one scheme you should know of and leverage. The CGTMSE scheme was launched in 2000 and provides eligible Member Lending Institutions (MLIs) the credit guarantee to offer business loans to micro and small enterprises. The initial credit facility ceiling was up to ₹2 crore but has recently been raised to ₹5 crore (April 2023). The revamping of the Credit Guarantee Scheme for MSEs was announced in the Union Budget 2023-24 for effect from April 2023.

Grow Your Business

You can learn more about loan under CGTMSE scheme on their official website:

What is CGTMSE scheme?

CGTMSE scheme full form is Credit Guarantee Fund Trust for Micro and Small Enterprises. It is an initiative undertaken collectively by the Government of India (GoI), the Ministry of Micro, Small and Medium Enterprises (MoMSME) and the Small Industries Development Bank of India (SIDBI).

The objective of the Credit Guarantee Scheme (CGS) is to enable micro and small businesses (MSEs) and new entrepreneurs to avail collateral-free loans to set up their enterprises and grow. It also aims to make it easier for the under-served and unserved to gain access to funds and facilitates credit flow to the MSE sector.

What is meant by credit guarantee?

When borrowers apply for loans, lending institutions usually ask for collaterals as security or a third-party guarantor to back the borrower. This reduces the risks in case the borrower defaults.

This is often difficult for small business owners who often lack asset support (e.g., land, property etc.) for collateral loans.

The Credit Guarantee Scheme was launched to ease this challenge. Under this scheme, when a MLI lends funds to a borrower, it is backed by the scheme and provides coverage for up to 75-85% of the loan amount. This reduces the risks and also gives MSEs the scope to borrow funds for starting and growing their business.

The CGTMSE scheme limit was initially set at ₹2 crore but has been increased to ₹5 crore (applicable from April 2023) to meet the diverse and wider entrepreneurial needs.

Note: The scheme is applicable for micro and small businesses (MSEs) as per the new MSME classification based on annual turnover and investment in plant and machinery.

Also read: Jan Samarth portal: Loan details, registration, login, how to apply

What is the maximum limit in CGTMSE?

The maximum loan limit under the CGTMSE scheme is ₹5 crores (as of April 2023). This credit can be provided by a single MLI individually or jointly with other lenders, as per the ceiling amount.

Credit Guarantee Scheme

Salient features of Credit Guarantee Scheme

In FY 2023, guarantee approvals of ₹1,04,781 crore was provided by the Credit Guarantee Scheme (Source: CGTMSE website, This is not surprising as the scheme was designed specifically to enable MSEs to borrow funds hassle-free.

On that note, let us take a look at the CGTMSE scheme details and prominent features:

  • Loan amount: Credit facility of up to ₹5 crore through member lending institutions can be covered for micro and small businesses (Note: For RRBs and selected MLIs, max. credit amount in ₹50 lakh)
  • CGTMSE scheme loan interest rate: Interest rate is charged as per RBI guidelines (learn more about general bank interest rates for business loans and how business loan interest is calculated)
  • Credit guarantee coverage: Up to 75-85% of loan amount coverage provided under the scheme
  • Eligible member lending institutions (MLSs): More than 100 financial institutions are added as MLIs including banks, NBFCs, PSUs, RRBs, foreign banks, SUCBs, and SFBs (Note: Apart from taking loan under CGTMSE scheme, borrowers can avail basic business loans from banks and NBFCs as per their needs)
  • CGTMSE scheme eligibility: Micro and small businesses engaged in manufacturing and services sector including retail trade are eligible to apply for CGTMSE loans (Note: Agriculture and SHG entities are not eligible for coverage under the scheme)
  • Collateral requirements: This is a no-collateral, no third-party guarantor loan scheme for small and micro businesses

For the latest updates on CGTMSE scheme subsidy and other benefits visit the CGTMSE website.

CGTMSE criteria for coverage

In this section, we take a look at the extent of coverage guarantee that is provided to MSEs under the CGTMSE scheme.

The maximum extent or coverage criteria is based on:

  • The range or loan amount being covered
  • The category or type of borrower
  • The location of the borrowers or units

Let’s take a look at the trust’s coverage criteria for CGTMSE loan scheme:

Category (including trading)

Max. guarantee coverage provided under the scheme

Up to ₹5 lakh credit ₹5 lakh – ₹50 lakh credit ₹50 lakh – ₹5 crore credit
Micro enterprises






MSEs in North-East region (including Sikkim and UT of J&K and Ladakh)  


Women entrepreneurs, SC/ST entrepreneurs, ZED certified units, People with disabilities, Agniveer promoted MSEs, Aspirational district MSEs  




Other borrower categories


*For more details on the Terms and Conditions, eligibility and borrow obligations please check details on

Also read: CETPs MSME scheme – Benefits, guidelines, documents, eligibility

Quick notes:

  • The annual guarantee fee structure (AGF) under the CGTMSE has been revised and the new CGTMSE fee applicable on/after 1 April 2023 is as low as 0.37%
Slab Up to ₹10 lakh ₹10-50 lakh ₹50 lakh- ₹1 crore ₹1-2 crore ₹2-5 crore
Standard rate (p.a.) 0.37% 0.55% 0.60% 1.20% 1.35%

*For ₹2-5 crore range, AGF of 1.35% applicable on the first year and the outstanding for the remaining tenure

  • The threshold limit for Waiver of Legal Action for claim lodgement by MLIs has also been increased from ₹5 lakh to ₹10 lakh
  • The option to claim for settlement in a single instalment is now available (i.e., instead of the standard 75%-25% claim settlement, option to opt for single instalment with reduced extent of guarantee by 15%)
  • Addition 10% relaxation or concession in rate is offered under ‘social category’ or underserved section to women, SC/STs, persons with disabilities and Agniveers
  • Additional 10% relaxation or concession in rate is offered to North-East region including Sikkim state, and Union Territories of Jammu & Kashmir and Ladakh (up to ₹50 lakh) and to MSEs from aspirational districts
  • Additional 10% relaxation or concession in rate is offered to MSEs that are ZED certified (i.e., Zero Defect Zero Effect)
  • Any MSE under all three categories (i.e., social, geographic and ZED certified) is eligible for a max. of 30% discount

Note: Apart from the CGTMSE scheme, women and SC/ST entrepreneurs can also avail loans under the Stand-Up India scheme. There are also special business loans for women entrepreneurs offered by banks and financial institutions.

What is the annual guarantee fee in CGTMSE?

There are some fees associated with the CGTMSE scheme. One such CGTMSE fee is the Annual Guarantee fee (AGF), which is an essential charge that ensures the loan guarantee.

These fees are important as it acts as a safety net and encourages more MLIs to extend loan and financial support to small businesses.

Here’s a snapshot of the Annual Guarantee Fee (AGF) structure:

Slab Standard Rate Fee rate after Discount Fee rate with risk premium
(-10%) 15% 30% 50% 70%
Up to ₹10 lakh 0.37 0.33 0.43 0.48 0.56 0.63
₹10 lakh – ₹15 lakh 0.55 0.50 0.63 0.72 0.83 0.94
₹50 lakh – ₹1 crore 0.60 0.54 0.69 0.78 0.90 1.02
₹1 crore – ₹2 crores 1.20 1.08 1.38 1.56 1.80 2.04
₹2 crores – ₹5 crores 1.35 1.22 1.55 1.76 2.03 2.30

*Source: //

CGTMSE scheme eligibility

The next obvious question is – Who is eligible for the CGTMSE scheme loan?

As mentioned earlier, all new and/or existing manufacturing and services units including retail trade fall under CGTMSE scheme eligible borrowers. However, the scheme eligibility does not include self-help groups (SHGs), educational and training institutions and agricultural activities.

Note: Businesses involved in the agro-sector can check the ASPIRE scheme details to avail funding for their business.

CGTMSE scheme documents

Documents required for CGTMSE loan application

To avail the CGTMSE loan subsidy, there is a list of documents required for CGS loan application.

  • Filled in CGTMSE application form with passport sized photograph
  • CGTMSE loan coverage letter
  • Business incorporation or Company Registration certificate (learn about micro business registration process)
  • Business project report
  • Copy of loan approval from Bank/NBFC

In addition to these, the lending institution may request for additional documents as the case may be (e.g., latest annual report, financial statements etc.)

How to get a business loan under CGTMSE scheme?

If you want to apply for a CGTMSE loan for your business, there are some steps you need to follow. These are easy to do and designed to ensure most qualified businesses can apply with ease.

  • If you are an existing business, ensure you have all your business incorporation documents, financial statements, annual reports and other documents in one place.
  • If you are a new business (e.g., One-person company, sole proprietorship, limited liability partnership, etc.) ensure your business is registered/incorporated with all the legal, compliance, taxation details in place.
  • You will then have to prepare a business plan or business project report. In general, a business plan contains details about your products/services, marketing strategies, expansion plans, financial forecast, management team, competitors, customers, market research and more.
  • Once the business plan is ready it has to be presented to the credit facility for review, following which you can file an application for a CGTMSE loan.
  • You will next have to identify a lender i.e., bank, NBFC, etc. that offers the scheme.
  • Once the lending institution e.g., banks have received your CGTMSE loan application, the verification process is similar to any other loan application process. They will check every detail added and validate the potential of the business (Note: Since the objective of the CGTMSE scheme is to make funds available to businesses based on their potential, this is an important step for banks/lenders).
  • If the bank is satisfied with the application details, the loan is sanctioned as per the policies of the bank. The bank also applies to the authorities at CGTMSE for guarantee coverage.
  • Once the coverage is approved by the CGTMSE, the applicant will have to pay the service charges and guarantee fee (varies between 1-2% p.a. plus risk premium).

Note: There are other government start-up business loans that can be availed in case one is not eligible or cannot avail CGS loans.

Which bank provides CGTMSE?

There are public sector banks, private sector banks, and regional rural banks that offer credit under the CGTMSE scheme, apart from NBFCs and foreign banks.

  • Public sector banks: Allahabad Bank, Bank of Baroda, Canara Bank, SBI etc.
  • Private sector banks: City Union Bank, HDFC Bank, ICICI Bank Ltd., IndusInd Bank, The South Indian Bank, etc.
  • Foreign banks: DBS Bank, Standard Chartered Bank, Deutsche Bank, etc.
  • Financial institutions: Delhi Financial Corporation, Export Import Bank of India, etc.
  • Regional Rural Banks: Bihar Gramin Bank, Dena Gujarat Gramin Bank, Kerala Gramin Bank, etc.

In the next section, we list out some of the other member lending institutions and  banks for loans under the CGTMSE scheme.

Also read: CGTMSE new member registration process – How MLIs can register as a lender under CGTMSE

List of Member Lending Institutions and Banks/NBFCs under CGTMSE (CGS-I and CGS-II)

There are several member lending institutions and CGTMSE scheme banks and institutions through which the guarantee is provided.

Listed below are some of the popular banks (CGS-I) and NBFCs (CGS-II) as lending institutions offering funds to micro and small businesses under the CGTMSE scheme:

CGTMSE scheme banks – CGS-I

Lender category (MLI) Numbers (April 2023) Name of institutions
Public sector banks 12 State Bank of India (SBI CGTMSE scheme), Bank of Maharashtra, Bank of Baroda, Punjab & Sind Bank, Punjab National Bank, Bank of India, Indian Bank, Canara Bank, Indian Overseas Bank, Central Bank of India, UCO Bank, Union Bank of India
Private sector banks 22 Axis Bank, ICICI Bank, YES Bank, Bandhan Bank, DCB Bank, IDBI Bank, HDFC Bank, IDFC First Bank, Kotak Mahindra Bank, The South Indian Bank and others
Foreign banks 6 Standard Chartered Bank, DBS Bank, Deutsche Bank and others
Small Finance Banks (SFBs) 10 Jana Small Finance Bank, Equitas Small Finance Bank, Ujjivan Small Finance Bank, Utkarsh Small Finance Bank and others
Regional Rural Banks (RRBs) 23 Mizoram Rural Bank, Tamil Nadu Grama Bank, Punjab Gramin Bank, Kerala Gramin Bank, Jharkhand Rajya Gramin Bank, Uttar Bihar Gramin Bank, Karnataka Vikas Grameena Bank and others
Financial institutions 9 Export Import Bank of India, Small Industries Development Bank of India, National Small Industries Corporation Ltd. and others
Scheduled Urban Co-operative Banks 13 Saraswat Co-operative Bank Ltd., Citizen Credit Co-operative Bank Ltd., NKGSB Co-operative Bank Ltd., New India Co-operative Bank Ltd. and others
Other Co-Op Banks 25 The Vijay Co-operative Bank, UP Co-operative Bank Ltd., The Andhra Pradesh State Co-operative Bank Ltd., The Hisar Central Co-operative Bank, Jalgaon Peoples Co-op Bank Ltd. and others

*For the complete list of CGTMSE scheme banks, visit the website:


There is an additional 45 NBFCs included under the Credit Guarantee Scheme for NBFCs. Some of the popular names include:

  • Aditya Birla Finance Limited
  • Fullerton India Credit Company Limited
  • Lendingkart Finance Limited
  • Tata Motors Finance Limited
  • Tata Motors Finance Solution Limited
  • Hero Fincorp Limited
  • Ugro Capital Limited
  • Mahindra and Mahindra Financial Services Limited
  • Bajaj Finance Limited
  • IIFL Finance Limited
  • Edelweiss Retail Finance Limited
  • Poonawalla Fincorp Limited
  • Tata Capital Financial Services Limited

Success of CGTMSE scheme in India – April 2023

The CGTMSE scheme has been one of the most accepted and successful loan schemes introduced by the government for micro and small enterprises. The success encouraged the government to infuse an additional ₹9,000 crore in the CGTMSE corpus, effective from April 2023 (Source: Financial Express, April 2023).

As per the new CGTMSE scheme revisions, a loan of up to ₹5 crore can be raised by more than one financial institution/bank either independently or jointly based on the lender’s ceiling amount. The scheme also has included microfinance institutions (MFIs) to its list of members. Microfinance institutions, like banks provide loans or micro finance loans of a smaller value.

In FY2023, a total of 11,65, 786 number of guarantees were approved under the CGTMSE scheme.

FAQs on CGTMSE scheme

Is Udyam registration required to avail loans under CGTMSE scheme?

Yes. As per circular, from January 2023 Udyam registration is required. Since the scheme is applicable to micro and small businesses only, a borrower must register their business in the Udyam portal, obtain the MSME registration certificate and provide the Udyam registration number to avail funds under the scheme.

Can a borrower get loans from more than one MLIs?

Yes, as per the latest changes, credit facilities can be availed through more than one lender either jointly or separately. The amount of credit offered will depend on the individual lender’s ceiling.

Sohini Banerjee

Sohini is a seasoned content writer with 12 years’ experience in developing marketing and business content across multiple formats. At Tata nexarc, she leverages her skills in crafting curated content on the Indian MSME sector, steel procurement, and logistics. In her personal time, she enjoys reading fiction and being up-to-date on trends in digital marketing and the Indian business ecosystem.