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The Telangana government is planning a new instrument on the lines of Centre's Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for the MSMEs in the state.
The government would work out an arrangement with the bankers in which the state would back collateral-free loans besides also repaying them to the banks in case of default.
“We will also have a CGTMSE at the state-level for the MSME sector. The state government will back the credit provided by banks to entrepreneurs. And if any MSME defaults, the state government would repay 100 per cent to the banks from an earmarked fund for the sector,” said Jayesh Ranjan, commissioner for industries, commerce and export promotion.
The institutional mechanisms and modalities of the scheme will be discussed in the next State-level Bankers’ Committee meeting. The earmarked fund and its corpus were yet to be finalised, he added.
He also said the state government would discuss with the banking sector on the formation of an empowered SLBC for the MSME sector. The proposed MSME state-level banking committee would work to achieve speedy financial clearances and timely intervention of the state industrial administration and the banking sector for avoiding bankruptcy in small and medium industries.
“We realised that in the general SLBC, the specific focus we need to accord to MSMEs was getting diluted. We are going to discuss the idea with the bankers in the next SLBC meeting,” said Ranjan.
Telangana chief minister K Chandrasekhar Rao will chair the empowered banking committee and it will meet every three months. Public sector banks, industrial development banks, credit rating agencies and investment bankers will get permanent membership in the committee.
