NEW DELHI: The Delhi government on Tuesday signed a Memorandum of Understanding (MoU) with central government entity CGTMSE to provide collateral free loans up to Rs 10 crore to city-based entrepreneurs.
Delhi Chief Minister Rekha Gupta said the government has set aside a fund of Rs 50 crore to service loans worth Rs 2,500 crore without the need of any collateral.
She said there was no cap on the number of beneficiaries even as an initial target of one lakh was set initially.
Explaining the operational details of the scheme, the Chief Minister stated that under the Delhi Credit Guarantee Scheme, the responsibility for loan guarantees will be jointly shared by the Delhi government and CGTMSE. Of the total loan amount, CGTMSE will provide a guarantee cover of 75 to 90 per cent, while the remaining portion will be secured by the Delhi government.
As a result, up to 95 per cent of the loans extended by banks will be government-guaranteed, reducing the banks’ exposure to just 5 per cent and enabling them to lend more confidently to small businesses. It will cover all sectors, including manufacturing, service, and retail, she said, adding that the Delhi government has set 10 percent as non-performing assets (NPA) limit to keep its financial liability in check.
Industry Minister Manjinder Singh Sirsa described the initiative as a historic gift for Delhi’s industrial and economic future. He said the scheme represents a major structural reform for nearly one million MSMEs in Delhi, including over 200,000 manufacturing units.