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CGTMSE Scheme for MSMEs

Get Loan at Government Guarantee without Collateral Security

CGTMSE stands for Credit Guarantee Fund Trust For Micro and Small Enterprises. My Mudra CGTMSE Loans are collateral-free loan facilities designed for Micro and Small Enterprises (MSEs).

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Interest Rates & Charges

Interest Rates & Charges


As a practice, the CGTMSE Loans interest rate ranges between 14 to 18%. The interest rates include the guarantee cover as well. CGTMSE scheme terms and conditions have gone through multiple changes. Now the fee is charged only on the guarantees amount during the first year of the loan. After the first year, fee is charged on the outstanding amount only. The similar process continues for the subsequent years.


The interest rates for CGTMSE Loans can be either fixed or at a diminishing rate of interest (also known as the reducing balance rate). The former will remain constant throughout the loan period whereas the next one will be applicable on the balance of your principal amount only. 









The maximum amount of credit facility

Up to Rs. 5 lakh

More than Rs. 5 lakh to Rs. 50 lakh

More than Rs.50 lakh to Rs. 2 crores

Micro Enterprises

85 % of the default amount maximum of Rs. 4.25 lakhs.

75 % of the default amount maximum of Rs. 37.50 lakhs.

75% of the default amount maximum Rs.1.5 crores

Women and Units in NER

80%t of the default amount maximum Rs.40 lakhs for credit facility up to Rs.50 lakhs. 

All others

75% of the default amount maximum Rs.40 lakhs for credit facility up to Rs.50 lakhs. 

Business activity

Credit from Rs.10 lakhs to Rs. 1 crore

MSE Retail Trade

50% of the default amount maximum of Rs.50 lakhs.

Types of CGTMSE Loans Interest Rate

There are two kinds of CGTMSE Loans interest rates: fixed and floating.

Fixed Interest Rate

Here, the rate of interest charged on the CGTMSE Loans amount will remain constant throughout the loan repayment period. You know your CGTMSE Loans EMI obligation at the start of the tenor, allowing you to plan your monthly budget accordingly.


Floating Interest Rate

Here, CGTMSE Loans interest rates could change depending on changes to the Marginal Cost of Lending Rate (MCLR), which is the base rate set for banks by the RBI. With changes in MCLR, the interest rate on loans also gets revised. With a lower interest rate, the repayment amount also reduces. On the other hand, if the interest rates increase, your EMI obligation will also increase. A floating CGTMSE Loans interest rate makes it difficult for you to ascertain your monthly financial obligation.

CGTMSE Loans Interest Calculation Method

There are two methods to calculate interest: flat rate method and the reducing balance method.

In the flat interest rate method, the interest rate is based on the complete loan amount you pay during the repayment period. In case of reducing the balance method, the rate of interest on the CGTMSE Loans will be considered and calculated on the basis of the outstanding loan amount.

Flat Interest Rate Calculation

EMI = (principal + total interest payable) / loan tenure in months i.e. total interest payable = P x r x n/100

Where, ‘P’ is the principal loan amount, ‘r’ is the rate of interest, and ‘n’ is the loan tenure in months.

Floating Interest Rate Calculation

EMI = [P x r x (1 + r) ^n] / [(1 + r) ^(n-1)]

Where, ‘P’ is the principal loan amount, ‘r’ is the rate of interest, and ‘n’ is the loan tenure in months.

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