Inclusion of Non-Scheduled Urban Co-operative Banks, State Co-operative Banks, and District Central Co-operative Banks as Member Lending Institutions by the CGTMSE, has led to rounds of cheers among co-operators. Now, these banks can lend to MSMEs without much worry for recoveries, as the guarantees are taken by the government in such cases.
Reacting to the news, NAFCUB President Jyotindra Mehta said “On behalf of NAFCUB and the entire urban cooperative banking sector, I am thankful to the Hon’ble Finance Minister and Hon’ble Minister for MSMEs, for inclusion of non-scheduled cooperative banks by the CGTMSE as eligible banks for the guarantee cover.”
NAFCUB has been in correspondence with both Hon’ble ministers and has been including this issue in its pre-budget submissions in the last three years. This will encourage all the UCBs fulfilling the requirements to be able to lend more to micro and small enterprises and free many of them from borrowing through informal sources at high rates of interest underlined Mehta.
3rd February dated Circular of UDAAN (CGTMSE) says that Non-scheduled UCBs, DCCBs, and State Co-op Banks could be eligible lenders if they have Minimum CRAR of 9%, Net profit during the last completed FY; Gross NPAs of 5% or less; Compliance with CRR / SLR requirements; and No major regulatory and supervisory concerns.
It may be noted that all other covenants of the current Credit Guarantee Scheme would apply mutatis mutandis to such guarantee proposals with regard to other operational modalities, etc, as modified from time to time, says the Circular.
“Eligible NSUCBs, StCBs & DCCBs are requested to approach CGTMSE for completing the formalities with regard to registration as Member Lending Institution (MLIs) of CGTMSE and one-time execution of specified documents with the Trust”, reads the Circular.
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), jointly set up by the Ministry of Micro, Small & Medium Enterprises (MSME), Government of India, and Small Industries Development Bank of India (SIDBI), aims to catalyze the flow of institutional credit to
Micro & Small Enterprises (MSEs).
Over the past 20 years, CGTMSE has been instrumental in providing guarantee cover to collateral and/or third-party guarantee-free credit facilities extended by eligible Member Lending Institutions. During Financial Year 2020-21, a total number of 8.36 lakh guarantees have been approved for an amount of Rs. 36,954 crore.