TN credit guarantee scheme by September

CHENNAI: The Tamil Nadu Credit Guarantee Scheme (TNCGS), for which Rs 100 crore was allocated during the budget, will be rolled out by August-end or September, according to Micro, Small and Medium Enterprises (MSME) department secretary Arun Roy.

The credit guarantee scheme will help MSMEs to get loans up to a certain limit without any surety or security. Credit availability was a major issue for MSMEs. The scheme offers guarantee on loans offered by financial institutions, thereby encouraging them to extend credit. In the event of the borrower being unable to repay, the CGS reimburses the loan amount. It is an insurance not only to the lender but to the borrower also.

“We have already moved some money to the CGS and the software is also under development. We have found a vendor for the software. When the software is ready, we will roll it out,” Roy told TNIE.The Department of MSME signed an agreement with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to develop the portal meant for the implementation of the TNCGS earlier this year.

“It is a capital guarantee fund. With this Rs 100 crore, we can support up to Rs 5,000 crore. Only if the loan gets defaulted, will this guarantee be called. It also depends on how much loan the banks are comfortable providing,” he said.

To a query on how many MSMEs stand to benefit from the scheme, Roy said it would be known one year from now when the scheme gets implemented. The government does not have any data on how MSMEs were impacted due to Covid-19.

Tamil Nadu has the third-largest number of MSMEs in the country. As per the 73rd National Sample Survey (NSS) conducted by the National Sample Survey Office, Tamil Nadu has 49.48 lakh MSMEs (which is around 8% of the total number of MSMEs in the country) providing jobs to 96.73 lakh persons.