The Centre’s move in reducing interest rates on loans obtained under the Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) will attract more entrepreneurs in the Tiruppur cluster, according to the Tiruppur Exporters’ Association (TEA).
In the Budget 2023-24, Finance Minister Nirmala Sitharaman announced revamping of CGTMSE with effect from April with an infusion of ₹9,000 crore to the corpus to enable additional collateral-free guaranteed credit to ₹2-lakh crore and reduction in the cost of the credit by about one per cent.
On Friday the government announced the infusion of ₹8,000 crore into the CGTMSE corpus on March 30. The announcement further said that CGTMSE has issued guidelines reducing annual guarantee fee for loans up to ₹1 crore from a peak rate of 2 per cent per annum to 0.37 per cent.
“This will reduce the overall cost of credit to MSMEs to a great extent,” it added. The ceiling limit for guarantees has also been enhanced to ₹5 crore from ₹2 crore earlier.
Commenting on these announcements, KM Subramanian, President, TEA said, MSMEs will largely benefit from the reduction of annual guarantee fee for loans up to ₹1 crore. He added that the move will also attract more entrepreneurs in the cluster.
Subramanian also welcomed stoppage of legal proceedings for settlement of claims of guarantees for loan outstanding up to ₹10-lakh.