To encourage flow of credit to micro and small enterprises, the trust that provides guarantee cover on collateral-free loans extended by banks is considering lightening the annual guarantee fee burden.
Once the guarantee fee gets rationalised, banks may be able to pare a tad the interest rate they charge borrowers in the micro and small enterprise (MSE) segment.
The proposal being examined by the Credit Guarantee Fund Trust for Medium and Small Enterprises (CGTMSE) is that the annual guarantee fee should be payable on the sanctioned limit till the term loan is fully disbursed.
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