Micro, Small and Medium Enterprises (MSMEs) are the backbone of India’s economy, contributing nearly 30% to GDP and employing over 11 crore people. Recognizing their vital role, the Government of India and the Reserve Bank of India (RBI) have introduced multiple initiatives to make credit for MSMEs more seamless, affordable, and timely including the recently accounced enhanced credit guarantee for msme.
One of the most impactful steps is the enhancement of the credit guarantee limit under CGTMSE, along with a host of schemes like PMEGP, PM Vishwakarma, SRI Fund, TReDS, and Unified Lending Interface (ULI).
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Enhanced Credit Guarantee for MSMEs (CGTMSE)
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) has been significantly strengthened:
- ₹9,000 crore corpus infusion into the fund.
- Enables an additional ₹2 lakh crore credit flow to MSMEs.
- Guarantee ceiling raised from ₹5 crore to ₹10 crore (effective April 1, 2025).
- Up to 90% guarantee coverage across various loan categories.
This means MSMEs can now avail larger loans at lower costs, with reduced risk for lenders.
Key Schemes and Facilities Supporting MSMEs
1. PMEGP (Prime Minister’s Employment Generation Programme)
- Margin money subsidy up to 35%.
- Project cost limit: ₹50 lakh (Manufacturing), ₹20 lakh (Services).
- Encourages first-time entrepreneurs to start non-farm enterprises.
2. PM Vishwakarma Yojana
- Launched in 2023 for artisans and craftspeople in 18 traditional trades.
- Loans up to ₹3 lakh with 8% interest subvention.
3. SRI Fund (Self-Reliant India Fund)
- ₹50,000 crore equity infusion to scale promising MSMEs.
- Mix of ₹10,000 crore from Govt and ₹40,000 crore from private equity/VC.
4. SAMADHAAN & ODR Portal
- SAMADHAAN (2017) monitors MSME payment delays.
- 161 Facilitation Councils set up across India.
- ODR Portal (2025) provides digital dispute resolution for quicker settlements.
5. TReDS (Trade Receivables Discounting System)
- Electronic financing of MSME invoices from corporates, PSUs, Govt. Departments.
- 5 licensed entities operational.
- Corporate onboarding threshold reduced to ₹250 crore turnover (Nov 2024).
6. Unified Lending Interface (ULI) by RBI
- Digital-first lending platform for frictionless MSME credit.
- Reduces paperwork, simplifies applications, cuts loan approval times.
- Helps banks and NBFCs make faster, data-driven lending decisions.
Why This Matters for MSMEs
These reforms create a seamless credit ecosystem for MSMEs by:
- Raising credit limits under CGTMSE.
- Simplifying loan access with ULI.
- Supporting entrepreneurs with PMEGP subsidies.
- Protecting against delayed payments via SAMADHAAN & ODR.
- Offering equity for growth-stage businesses through the SRI Fund.
📌 Frequently Asked Questions (FAQs)
1. What is the Credit Guarantee Scheme (CGTMSE) for MSMEs?
The CGTMSE provides credit guarantees to banks and NBFCs to encourage them to lend to MSMEs without collateral. In April 2025, the guarantee ceiling was raised from ₹5 crore to ₹10 crore with up to 90% coverage.
2. How does PMEGP support MSMEs?
The PMEGP scheme provides margin money subsidy up to 35% for setting up new manufacturing and service enterprises. It helps first-time entrepreneurs with project costs of up to ₹50 lakh (manufacturing) and ₹20 lakh (services).
3. What is the difference between CGTMSE and PMEGP?
- CGTMSE: Provides a credit guarantee for loans to MSMEs.
- PMEGP: Provides subsidy for entrepreneurs to start new enterprises.
4. How can MSMEs benefit from TReDS?
TReDS (Trade Receivables Discounting System) allows MSMEs to sell their invoices to financiers, ensuring faster cash flow and reducing dependency on delayed payments from corporates and PSUs.
5. What is the role of RBI’s Unified Lending Interface (ULI)?
The ULI platform simplifies loan applications for MSMEs, reduces documentation, and helps lenders approve loans faster, making credit more accessible across India.
