The Credit Guarantee Fund Trust for Micro and Small

Solution

• The CGTMSE scheme was launched in 2000 by the Ministry of Micro, Small and Medium Enterprises (MSME), Government of India, in collaboration with SIDBI. • Its primary objective is to encourage collateral-free loans to Micro and Small Enterprises (MSEs). • Under the scheme, banks and financial institutions receive a credit guarantee cover (up to a specified percentage) in case the borrower defaults. • This reduces the lender’s risk and motivates them to extend loans to first-time or small entrepreneurs. Thus, the partner institution is SIDBI.