Today, we have brought another article that clearly defines the amount of coverage that the government has increased to. Now, the bigger businesses need not have to worry about the collateral amount to obtain the cash credit limits to increase the business prospects. Here, we are providing the detailed structure of CGTMSE coverage that the government has defined. Please go through the article and comment down if you have any doubts and we will definitely get back.
CGTMSE COVERAGE: Central Government has recently released a new Circular No.220 / 2022 – 23 dated March 31, 2023, on increase in ceiling of coverage from 200 lakh to500 lakh – CGS I. Further, in line with the
announcement made by the Hon’ble Finance Minister, Government of India, during the
Budget speech for FY 2025-26, it has been decided to increase the ceiling of guarantee
coverage from ₹5 crore to ₹10 crore under Credit Guarantee Scheme – I (for Banks)
(applicable for Public Sector Banks, Pvt Sector Banks, Foreign Banks and Select FIs).
The standard rate of Annual Guarantee fee shall be as under:
Slab (₹) Standard Rate % (AGF)
Above 5 crore -8 crore 1.10
Above 8 crore -10 crore 1.20
Further, in line with the announcement made by the Hon’ble Finance Minister, Government of India, during the Budget speech for FY 2025-26, it has been decided to increase the ceiling of guarantee coverage from ₹5 crore to ₹10 crore under Credit Guarantee Scheme – I (for Banks) (applicable for Public Sector Banks, Pvt Sector Banks, Foreign Banks and Select FIs). This enhancement in CGTMSE Coverage aims to provide better support for small and medium enterprises. The standard rate of Annual Guarantee fee will also reflect this change, ensuring that businesses can access the necessary financial resources. It is important to note that all other covenants of the Credit Guarantee Scheme will continue to apply.