Credit Guarantee Scheme

Non-availability of timely and adequate credit is one of the most important problems of the Micro and Small Enterprises. One of the major causes for low availability of bank finance to this sector is the high risk perception of the banks in lending to MSEs and consequent insistence on collaterals which are not easily available with these enterprises. The problem is more serious for micro enterprises requiring small loans and the first generation entrepreneurs. The Government of India has therefore launched a scheme called The Credit Guarantee Fund Scheme for Micro and Small Enterprises through which the Government provides guarantee cover to the Banks for providing loans to the Micro and Small Entrepreneurs.