Author(s): Alka Singh Bhatt
This study evaluates the Credit Guarantee Fund Scheme for Micro, and Small Enterprises (CGFS) administered by Credit Guarantee Fund Trust for Micro, and Small Enterprises (CGTMSE). In order to achieve the objective of the study, we had relied on primary data and secondary analysis. We spoke to more than 2500 beneficiaries of the scheme in 11 states – Uttarakhand, Uttar Pradesh, West Bengal, Chhatisgarh, Maharashtra, Rajasthan, Karnataka, Andhra Pradesh, Telengana, Assam and Meghalaya. We also interviewed 60 officials of member lending institutions in these states. Two separate questionnaires were prepared for these purposes. After evaluation of the CGTMSE scheme across various states of India we found that CGTMSE as an institution has played an essential role in the financial uplift of the sector in country. Most start-up and SMEs when starting to do businesses tends to use their own resources, from family and friends and also from the other external funding sources such as banks. Therefore, in order to develop, expand production and business, SMEs looks to external sources and mainly access bank financing. On the other hand, banks before lending to SMEs they often follow the precautionary principle and risk prevention. One of the requirements of banks when making lending to SMEs is to have collateral. Under such circumstances CGTMSE has positively impacted the entrepreneurial eco- system in the country and has been a boon for the SME sector. In all there were six major areas where CGTMSE funding impacted positively to the MSE sector - technology up gradation, skill up gradation, market development, sustainability of scheme, economic impact, and social Impact.