Govt inks MoU to implement MCGS

SHILLONG, Oct 28: The state government on Friday signed a Memorandum of Understanding (MoU) with Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) under the Ministry of MSME to implement the Meghalaya Credit Guarantee Scheme (MCGS), during a programme here.
According to a statement, the MoU was inked in a bid to address the challenges faced by the banks in aggressively extending credit to the MSE borrowers, to strengthen the credit delivery system and facilitate flow of credit to the MSE sector.
“Currently, the loans taken by MSME borrowers are covered under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) against a risk coverage of 75% of the loan amount under various MSME schemes. However, banks still perceive their portion of risk at 25% as high. This is one of the deterrents for the banks to extend credit to the MSME borrowers. To overcome this major challenge, the state government is collaborating with CGTSME by increasing the coverage guarantee up to a maximum of 95% by launching the Meghalaya Credit Guarantee Scheme (MCGS). This will minimise the risk and encourage collateral-free lending by the member Lending Institutions,” the statement said.
Chief Minister Conrad Sangma, who also was part of the programme, emphasised that such government’s interventions are part of the overall objective of encouraging and promoting entrepreneurship in the state.