A Credit Guarantee Fund Scheme for Small Industries has been launched and the SIDBI set up the Credit Guarantee Fund Trust for Small Industries (CGTSI), to implement the Guarantee Scheme. The main objective of CGTSI is to facilitate hassle-free credit to the SSI sector and encourage banks to shift from collateral-based or security-oriented lending to.
The CGTSI is in the process of developing a Mutual Credit Guarantee Scheme (MCGS) on the lines of similar schemes in Italy and other European countries; such schemes essentially involve a guarantee from industry associations in which the borrower is also a member which, in turn, enhances the lender’s confidence.