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Meghalaya inks MoU with Credit Guarantee Fund Trust for MSME borrowers

The Meghalaya government on Friday signed an MoU with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGFTMSE) to help facilitate flow of credit to MSME borrowers

Garment, textile, business, MSME, sme, jobs, labour, manufacturing, local, economy

Press Trust of India Shillong
The Meghalaya government on Friday signed an MoU with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGFTMSE) to help facilitate flow of credit to MSME borrowers.
The MoU between the state Finance department and the CGTMSE under the Ministry of MSME was signed to implement the 'Meghalaya Credit Guarantee Scheme', a statement issued by the department said.
This MoU will strengthen the credit delivery system and facilitate flow of credit to the MSE sector, it added.
Meghalaya Chief Minister Conrad Sangma who was present during the signing of the MoU emphasized that such interventions by the state government is part of the overall objective of encouraging and promoting entrepreneurship in the state.
Currently, the loans taken by MSME borrowers are covered under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) against a risk coverage of 75 per cent of the loan amount under various MSME schemes.
However, banks still perceive their portion of risk at 25 per cent as high. This is one of the deterrents for the banks to extend credit to the MSME borrowers.
To overcome this major challenge, the launching the MCGS increases the coverage guarantee up to a maximum of 95 per cent and will minimize the risk and encourage collateral free lending by the member lending institutions, the statement said.
Through this mechanism, the state government is leveraging on the existing CGTMSE scheme of Government of India. With a contribution of Rs 5 crore, a portfolio of Rs 250 crore would be created.
Considering average loan size of Rs 1 lakh, more than 25,000 units would be supported through this state government intervention. In addition, considering 3 employees per unit, 75,000 employment opportunities would be generated under the MSE sector in the state.
The MCGS will commence tentatively from November 1 this year and will continue till the portfolio reaches a level commensurate with contribution of the state government.
The total corpus commitment towards the proposed MCGS will be increased taking into account the initial performance of the scheme with the corpus of Rs 5 crore.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Oct 29 2022 | 7:19 AM IST

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