NEW DELHI: A major move to bolster micro and small enterprises (MSEs) in the national capital, the Delhi Government on Tuesday signed a Memorandum of Understanding (MoU) with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to roll out the Delhi Credit Guarantee Scheme.
The agreement was signed at the Delhi Secretariat in the presence of Chief Minister Rekha Gupta. The scheme seeks to tackle one of the most persistent hurdles faced by small entrepreneurs—limited access to institutional credit—by allowing them to obtain loans without offering collateral. The Chief Minister said the initiative would improve capital availability for entrepreneurs while substantially lowering lending risks for banks, thereby encouraging greater credit flow to small businesses.
“This initiative will strengthen Delhi’s business ecosystem, spur innovation, create employment opportunities and contribute to a more inclusive urban economy,” she said. Under the scheme, eligible micro and small enterprises will be able to avail collateral-free loans of up to Rs 10 crore. Emphasising the role of CGTMSE, the Chief Minister noted that the trust has established itself as a reliable national institution supporting collateral-free financing for MSEs. She said that many aspiring entrepreneurs in Delhi, particularly those entering manufacturing, services and allied sectors, often struggle to secure funding. The new scheme, she added, is designed to bridge this financing gap. Detailing the operational structure, the Chief Minister said the loan guarantee will be jointly borne by CGTMSE and the Delhi Government.
While CGTMSE will provide a guarantee cover ranging from 75 to 90 per cent of the loan amount, the remaining portion will be backed by the Delhi Government. This arrangement will ensure that up to 95 per cent of the loan value is government-guaranteed, reducing banks’ exposure to just 5 per cent and enabling them to lend with greater confidence.
The scheme will cover enterprises across multiple sectors, including manufacturing, services, retail, education and skill-training institutions. A dedicated fund of Rs 50 crore has been allocated for the initiative, which, through leverage, is expected to facilitate bank lending of nearly Rs 2,500 crore. The government has indicated that the corpus may be enhanced in the future if required. The Chief Minister further explained that the scheme has been structured with a leverage ratio of 50:1, meaning an investment of Rs 2 crore can enable loans worth up to Rs 100 crore. To safeguard public finances, an NPA ceiling of 10 per cent has been prescribed. While the government initially aims to support one lakh entrepreneurs, CGTMSE has clarified that there will be no upper limit on the number of beneficiaries.
Any eligible entrepreneur meeting the scheme’s criteria will be able to access credit under the programme. Special focus has been placed on women and first-time entrepreneurs to promote broader participation in entrepreneurial activity.