Delhi Government Inks MoU with CGTMSE for Collateral-Free Business Loans
The Delhi government on Tuesday formalized a significant partnership by signing a Memorandum of Understanding (MoU) with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), a central government entity. This collaboration aims to provide collateral-free loans of up to Rs 10 crore to entrepreneurs based in the national capital, marking a pivotal move towards enhancing financial accessibility for businesses.
Financial Empowerment for a 'Viksit Delhi'
At the MoU signing ceremony, Delhi Chief Minister Rekha Gupta emphasized that this initiative is a crucial step towards achieving the vision of a 'Viksit Delhi' (Developed Delhi). She highlighted the government's commitment to financial empowerment by allocating a dedicated fund of Rs 50 crore. This fund is designed to service loans worth Rs 2,500 crore, eliminating the need for any collateral from borrowers.
Chief Minister Gupta stated that there is no cap on the number of beneficiaries, although an initial target of one lakh individuals has been set. She explained that under this scheme, the central government will provide a guarantee covering 75-90% of the loan amounts, with the Delhi government offering the remaining guarantee. This risk-sharing mechanism is intended to encourage lending and support business growth across various sectors.
Comprehensive Coverage and Risk Management
The scheme is inclusive, covering all sectors such as manufacturing, services, and retail. To ensure financial prudence, the Delhi government has established a non-performing assets (NPA) limit of 10%, which will help keep its financial liabilities in check. Gupta addressed the challenges faced by many in Delhi, saying, 'There are lakhs of youths, startups, traders, and manufacturers in Delhi who were forced to take rounds of the banks for loans and were unable to get them due to the requirement of collateral. All of them will now be able to access these security-free loans.'
Focus on Inclusivity and Scalability
Industry Minister Manjinder Singh Sirsa added that the scheme offers further relief for women and Scheduled Caste (SC) entrepreneurs, underscoring the government's focus on inclusivity. He noted that about one lakh persons are expected to benefit from this initiative within the current year. Additionally, Sirsa mentioned that the Chief Minister has announced the government's readiness to increase both the number of beneficiaries and the loan amount of Rs 2,500 crore if necessary, demonstrating flexibility and scalability in response to demand.
Background on CGTMSE
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was established by the Ministry of Micro, Small and Medium Enterprises (MSME) to provide third-party credit guarantees. This support is particularly aimed at first-generation entrepreneurs, assisting them in setting up micro and small industrial units by mitigating the risks associated with lending without collateral.
This MoU represents a strategic effort to boost entrepreneurship and economic development in Delhi, aligning with broader national goals of supporting MSMEs and fostering innovation. By removing barriers to credit, the Delhi government aims to catalyze business growth and job creation, contributing to the region's overall prosperity.
