How much can you borrow under CGTMSE? The real answer behind the ₹10 crore headline

How much can you borrow under CGTMSE? The real answer behind the ₹10 crore headline

Start with the headline, but add the qualification that most pages leave out. Under CGTMSE's bank scheme, an eligible micro or small enterprise can obtain collateral-free credit facilities of up to ₹10 crore when the lender is a public sector bank, private sector bank, foreign bank or select financial institution. The earlier ₹5 crore ceiling was raised to ₹10 crore for guarantees approved on or after 1 April 2025.

The ₹10 crore figure is a scheme ceiling, not an entitlement. CGTMSE does not sanction or disburse the loan. The lender still decides the amount after examining the purpose of the facility, project viability, turnover, cash flow, working-capital assessment, leverage and repayment capacity.

The lender category matters. The ceiling remains ₹2 crore for Small Finance Banks, Regional Rural Banks, State Financial Institutions and the specified urban, state and district co-operative bank categories. For Microfinance Institutions, it is ₹50 lakh. So ₹2 crore is not an obsolete figure in every case; it is still the current cap for specific lender categories.

A larger overall sanction is also possible under CGTMSE's Hybrid Security product. The lender may take collateral for one part of the facility and place the remaining unsecured portion under CGTMSE, subject to the applicable scheme ceiling. The total credit facility can therefore exceed ₹10 crore, but the portion considered for CGTMSE cover cannot exceed ₹10 crore for the bank and select-FI category.

Startups are a separate track. Under the Credit Guarantee Scheme for Startups (CGSS), administered through NCGTC, a DPIIT-recognised eligible startup can receive guarantee support subject to a maximum guarantee cover of ₹20 crore per borrower. For transaction-based cover, the guarantee is 85% of the amount in default for a loan amount up to ₹10 crore and 75% for a loan amount above ₹10 crore. CGSS is a separate scheme, not an extension of CGTMSE.

The guarantee fee (AGF), and what it is not

The Annual Guarantee Fee is not the bank's interest rate. Interest is decided by the lender in accordance with applicable RBI guidelines and its assessment of the borrower. CGTMSE charges a separate guarantee fee, and the lender may either pass that cost to the borrower or bear it. The following standard AGF structure applies to guarantees approved or renewed on or after 1 April 2025.

These are standard rates, not necessarily the final rate charged in every case. Depending on the performance and risk classification of the Member Lending Institution, CGTMSE may allow a 10% discount on the standard rate or apply a risk premium of up to 70% of the standard rate.

Separate fee concessions are available for specified categories. The current scheme provides a 10% concession for the social category, including women, SC/ST, persons with disabilities, Agniveers and transgender entrepreneurs; a 10% geographic concession for eligible units in the North East including Sikkim and the Union Territories of Jammu & Kashmir and Ladakh, as well as units in Aspirational Districts and Identified Credit Deficient Districts; and a 10% concession for ZED-certified MSEs. An enterprise falling within all three blocks can receive a maximum combined concession of 30%.

How much of the loan does the guarantee actually cover?

CGTMSE does not ordinarily cover 100% of the amount in default. The standard cover for other eligible borrowers is 75%. Enhanced cover applies to specified categories: 90% for women entrepreneurs and MSEs promoted by Agniveers; 85% for SC/ST entrepreneurs, persons with disabilities, MSEs in Aspirational Districts and ZED-certified MSEs; and 80% for MSEs in the North East, Jammu & Kashmir and Ladakh. Micro enterprises receive 85% cover for credit facilities up to ₹5 lakh. MSEs in RBI-identified Credit Deficient Districts receive an additional five percentage points over the otherwise applicable cover.

For an ordinary borrower falling under the standard 75% category, a fully covered ₹10 crore exposure would mean maximum guarantee risk of about ₹7.5 crore. The applicable percentage depends on the borrower category and the terms in force when the guarantee is approved.

The guarantee protects the lender, not the borrower. Even when CGTMSE settles an eligible claim, the lender must continue recovery action for the full outstanding amount. The borrower's repayment obligation therefore remains unchanged.

The practical answer is not simply “₹2 crore, ₹5 crore or ₹10 crore.” The correct ceiling depends on the lender category. For public sector banks, private sector banks, foreign banks and select financial institutions, the current ceiling is ₹10 crore. For how a proposal is assessed before the guarantee becomes relevant, see our guide to a collateral-free CGTMSE loan in Pune.

Questions we get asked

So is the CGTMSE limit ₹5 crore or ₹10 crore?
For public sector banks, private sector banks, foreign banks and select financial institutions, it is ₹10 crore for guarantees approved on or after 1 April 2025. The earlier ₹5 crore ceiling no longer applies to those lender categories. A ₹2 crore ceiling continues for specified smaller-bank and co-operative lender categories.

What is the guarantee fee on a ₹3 crore exposure?
The standard AGF slab is 1.00% p.a. before any MLI-specific risk adjustment and eligible category concessions. The first-year fee is charged on the guaranteed amount; subsequent annual fees are charged on the applicable outstanding amount.

Does CGTMSE set the interest rate?
No. CGTMSE provides guarantee cover and charges the applicable guarantee fee. The lender decides the interest rate in accordance with RBI guidelines and its own credit assessment.

Reviewed by Bishal Mishra, Director, BM Credit Core Finserv Private Limited (Credit Core Finance), Pune. Last updated 26 June 2026. Primary sources checked: CGTMSE Circular Nos. 241, 250 and 251/2024-25; the CGS-I Scheme Document updated as on 1 April 2025; CGTMSE's current Fee Structure and Credit Facilities FAQs; and the CGSS Gazette Notification dated 8 May 2025.