Coverage of Collateral Free Loans (CGTMSE)

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Coverage of Collateral Free Loans (CGTMSE)


To provide collateral free loans upto Rs. 100/- lacs to Micro & Small Enterprises, as defined under MSMED Act, 2006.

The coverage of the Scheme is extended to all new and existing Micro and Small Enterprises (both in the Manufacturing Sector as well as in the Service Sector) as defined under MSMED Act, 2006.


The eligible loan limit under the Scheme is Rs.100 lacs. A borrower, who has availed certain credit facilities secured by collaterals and/or third party guarantees and is sanctioned distinct/separate credit facility without collateral security/third party guarantee, can be covered under CGTMSE scheme.


"Primary security" in respect of a credit facility shall mean the assets created out of the credit facility so extended and/or existing unencumbered assets which are directly associated with the project or business for which the credit facility has been extended. This means if a borrower is sanctioned working capital facility only, a charge can be created on the fixed assets of the unit even though the same are not financed by the Bank and the same will not be treated as collateral security. Similarly in case of sanction of Term/Demand loan on standalone basis, charge taken on current assets will not be treated as collateral security.


The credit guarantee cover is available up to 75% of the amount in default in respect of credit facilities up to Rs. 50/- lacs extended by the Lending Institution to an eligible borrower subject to maximum guarantee cover of Rs. 37.50 lacs and 50% for the facilities over Rs. 50/- lacs and up to a limit of Rs. 100/-, i.e. maximum of Rs. 62.50 lacs. In case of following categories of borrowers, guarantee cover is available up to 80% of the amount in default. a) Loans to Micro enterprises up to Rs. 5 lacs (85%). b) Loans to Micro and Small enterprises operated and/ or owned by women. c) All loans in North East Region including the State of Sikkim.

Guarantee Fee

Composite all-in Guarantee Fee as under

Credit Facility Annual Guarantee Fee (AGF) [% p.a.]
Women, Micro Enterprises
and units in North East Region (incl. Sikkim)
Upto Rs.5 lakh 0.75 1.00
Above Rs.5 lakh and upto Rs.100 lakh 0.85 1.00

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