Money & Banking

Credit Guarantee Fund Trust includes SUCBs as Member Lending Institutions

Our Bureau Our Bureau | Updated on October 02, 2019 Published on October 02, 2019

Recognising the significant role they play in financing micro and small enterprises (MSEs), the Credit Guarantee Fund Trust for MSEs (CGTMSE) has included scheduled urban co-operative banks (SUCBs) as Member Lending Institutions (MLIs).

This will help SUCBs avail guarantee cover for credit facilities extended by the trust fund to MSEs not covered by collateral security.

According to CGTMSE, any collateral/ third party guarantee free credit facility (both fund as well as non-fund based) extended by eligible lending institutions to new as well as existing MSEs, including service enterprises, with a maximum credit cap of ₹2 crore are eligible to be covered up to 85 per cent of the sanctioned amount of the credit facility.

As per RBI data for 2017-18, the share of MSE advances within priority sector lending was the highest at 29 per cent.

The eligibility criteria for inclusion of SUCBs as MLIs include: Demand & Time Liabilities (DTL) of not less than ₹750 crore on a continuous basis for one year; capital to risk weighted assets ratio of minimum 12 per cent; continuous net profit for the previous three years; gross non-performing assets of 5 per cent or less; no major regulatory and supervisory concerns.

Meanwhile, CGTMSE has also included new age fintech non-banking finance companies, registered with RBI and lending to MSEs, as MLIs.

Published on October 02, 2019
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.