Odisha to park Rs 100 cr with Centre to facilitate loans to MSEs

Odisha will deposit Rs 100 crore with the Centre to be eligible for additional coverage under the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) that is meant to provide collateral free loans to micro and small units.

"Government of India has asked for Rs 100 crore as fixed deposit at credit guarantee fund trust for micro and small enterprises for getting additional coverage under the scheme in the state. We will park the money after taking the concurrence of the finance department," said Panchanan Dash, secretary, state MSME department at a seminar on 'Credit Facilitation to MSME sector' organised on the occasion of 11th Entrepreneurs Week, 2015.

Dash said, the Development Commissioner (micro, small and medium enterprises) has written to the state government for considering the proposal of the Centre.

The credit guarantee fund scheme for micro and small enterprises was launched by the Government of India to make available collateral-free credit to the micro and small enterprises, both existing and the new ones.

The Union ministry of Micro, Small and Medium Enterprises and Small Industries Development Bank of India (SIDBI) had established a trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the scheme.

The corpus of CGTMSE is being contributed by the government and SIDBI in the ratio of 4:1 respectively. The trust corpus stood at Rs 1,906.55 crore by the end of March, 2010. The corpus was targeted to reach Rs 2500 crore by the end of 11th Plan.

Under the scheme the trust covers credit facilities extended by member lending institution(s) to a single eligible borrower in the micro and small enterprises sector for credit facility not exceeding Rs 50 lakh (in case of regional rural banks/financial institutions) and not exceeding Rs 100 lakh (scheduled commercial banks and select financial institutions) by way of term loan and working capital, without any collateral security and third party guarantee.

In Odisha, 11,301 proposals amounting to Rs 598.45 crore were covered under the scheme.

Bank officials said, the funds sought by the Centre may be used for contribution to the corpus fund.