Ministry of MSME implements the Credit Guarantee Scheme (CGS) for Micro and Small Enterprises (MSEs) to provide credit guarantees for the credit facilities extended to MSEs

The Ministry of Micro, Small & Medium Enterprises (MSME) has operationalised the Credit Guarantee Scheme (CGS) through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to extend credit guarantees to micro and small enterprises, including first‑generation entrepreneurs, women‑led firms and units in backward districts, without requiring collateral or third‑party guarantees. The guarantee ceiling was raised from Rs 5 crore to Rs 10 crore effective 1 April 2025, and the Annual Guarantee Fee (AGF) was cut by 50 % to as low as 0.37 % per annum. RBI’s Master Direction (09‑02‑2026) mandates scheduled commercial banks to forgo collateral for loans up to Rs 20 lakh to MSEs. Additional incentives include a 10 % AGF discount and extra 5 % guarantee coverage for enterprises in Identified Credit Deficient Districts, and a Tamil Nadu‑specific guarantee scheme (TNCGS) in partnership with the state government. Outreach programmes are regularly conducted to raise scheme awareness.