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Banks Averse to CGTMSE Scheme, Resist Lending

August 24, 2019

Banks Averse to CGTMSE Scheme, Resist Lending

The Credit Guarantee Trust for MSMEs (CGTMSE) scheme that was launched by the government in 2000 to support the MSMEs is the country is drawing resistance from the lenders in the county. Under the scheme, loans of up to ₹2 crores are offered by traditional lenders and NBFCS to MSMEs without any requirement of collateral.

The fact that borrowers can get loans without offering any collateral under the CGTMSE scheme makes it difficult for the lenders to recover the money if and when the former default.

Photo credit: Got Credit on Visual Hunt / CC BY

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