Initiatives for Micro and Small Enterprises (MSEs)
A joint initiative by the Ministry of Micro, Small and Medium Enterprises (MSME), Government of India, and the Small Industries Development Bank of India (SIDBI) aims to facilitate credit access for the MSE sector without requiring collateral or third-party guarantees. This initiative is embodied in the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which offers credit coverage of up to Rs. 200 lakhs.
Credit Guarantee Scheme:
The CGTMSE provides credit coverage to MSEs up to Rs. 200 lakhs.
Guarantee and annual fees charged by the CGTMSE are the responsibility of the borrower or the lending institution.
The Reserve Bank of India (RBI) has instructed all banks not to require collateral for loans up to Rs. 10 lakhs for the MSE sector.
General Credit Card (GCC) for Entrepreneurs
Non-farm entrepreneurs can secure credit for working capital and term loans through the General Credit Card (GCC) issued by banks.
Features of the GCC:
Issued as a smart card or debit card compatible with ATMs and swipe machines, containing the entrepreneur's identity, assets, and credit profile.
In non-digitized accounts, the GCC may be issued as a card/passbook, serving as both an identity card and a transaction record.
The credit limit is determined by the bank based on risk assessment.
The interest rate for GCC loans is set by the bank, and entrepreneurs should be aware of these charges.
Loan Application Process
Prepare Your Business Plan: Estimate your fund requirements and either visit the Udyami Mitra portal or go directly to a bank.
Application Submission: Obtain a loan application number and acknowledgment.
Respond to Queries: Address any questions from the bank or portal promptly and await their decision.
Track Your Application: Monitor whether your loan is sanctioned or rejected.
The Banking Codes and Standards Board of India (BCSBI) has set timelines for the processing of complete loan applications, including necessary documentation.
For MSE loan applications up to Rs. 5 lakhs: 2 weeks
For credit limits above Rs. 5 lakhs and up to Rs. 25 lakhs: 3 weeks
These timelines do not replace regulatory instructions from the Reserve Bank of India (RBI), and banks must adhere to any RBI-issued directives.
By leveraging these initiatives and credit facilities, MSEs can access necessary funding without the burden of collateral, fostering growth and development in the sector.
*The information in this document has been adapted from articles and posters available on https://www.rbi.org.in/FinancialEducation/Home.aspx The original articles can be accessed directly for more comprehensive insights.
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