Tamil Nadu Govt. Launches Credit Guarantee Scheme for MSMEs Offering Loans up to Rs 40 Lakhs

The Tamil Nadu Credit Guarantee Scheme (TNCGS) and the Tamil Nadu Trade Receivables Discounting System (TN TReDS) for Micro, Small, and Medium Enterprises (MSMEs) were introduced on Thursday by Chief Minister M.K. Stalin.

With the cooperation of the Union government's Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE), the TNCGS would provide a 90% guarantee for eligible loans up to 40 lakhs. For loans over Rs 40 lakh but under Rs 2 crore, qualified borrowers will receive an 80% guarantee.

For this program, the State government has set aside 100 crore rupees. According to a press release, the plan makes it easier to generate an end-to-end credit score that takes into consideration financial factors in addition to credit "behavior-based scores."

According to V. Arun Roy, MSME Secretary, the initiative, which lowers the requirement for collateral for MSMEs to secure loans, would initially be accessible to MSME clients of TAICO and TIIC.

Under this program, at least three banks were nationalized and will start lending to MSMEs in a week.

Interruptions in payments for supplies provided to larger corporations cause problems for MSMEs. All PSUs, statutory bodies, companies, and apex cooperatives in Tamil Nadu will be on an ERP platform that has been developed to solve this. The statement stated that TAICO Bank will settle the bills that have been uploaded to TN TReDS on the 180th day if the State entity has not paid the MSMEs that are on the TReDS platform as of the 179th day.

Additionally, on Thursday, the Institute of Chartered Accountants of India, the World Resource Institute, and the MSME Trade and Investment Promotion Bureau—now known as "FaMe TN"—exchanged MoUs.

Stalin founded the Coimbatore-based Tamil Nadu Coir Business Development Corporation. The Corporation, which was formed five months after its announcement, will concentrate on building new coir clusters, forming connections with foreign clients, establishing research and development centers, and strengthening ties between business and university.