LENDING TO MSE SECTOR UNDER CGTMSE SCHEME - EMERGING THREAT AND CHALLENGES FOR THE BANKERS
MSEs or Micro and Small Enterprises form the backbone of an economy. In India, MSEs have been picking up pace for past few years now. Though while acknowledging the significance of small businesses, banks do hesitate in extending loans to the first generation entrepreneurs. Owing to the inability of providing adequate collateral security against loans, micro and small enterprise owners face hurdles in having access to bank credit. Taking this into account, the government introduced the Credit Guarantee Fund Scheme for MSEs in August, 2000, wherein an Entrepreneur can avail loan without offering any collateral security and third party guarantee It also targeted at lowering the hindrances to credit flow to Micro and Small Enterprises .The objective of this scheme was to reduce the problem of collateral security. Further , CGTMSE in the current year has proposed to go for many changes including temporary suspension of CGTMSE scheme coverage to some banks due to very high level of NPAs under CGTMSE scheme accounts ,reported by some of the Banks. This paper attempts to study and discuss the various changes proposed by CGTMSE and its impact on MSE sector’s lending and future challenges for the Bankers to extend credit under the said scheme .
Credit Guarantee Fund Trust for Micro and Small Enterprises scheme
CGTMSE Circular No. 71/2013-14 dated December 17, 2013
CGTMSE circular CGTMSE/03/177 dated April 17, 2015
CGTMSE circular CGTMSE/44/255 dated April 28, 2015
CGTMSE circular CGTMSE/44/2365dated July 15, 2015
CGTMSE circular CGTMSE /44/630 dated September 30,2015
CGTMSE circular CGTMSE /44 , November 16, 2015
RBI Master Circular - Lending to Micro, Small & Medium Enterprises (MSME) Sector RBI/2010-11/79 RPCD.SME & NFS.BC.No.9/06.02.31/ 2010-11,July 1, 2010
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