On our part, we have advised the banks to take into account the incentives available to them under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme and assign zero risk weight for capital adequacy purpose for the portion of the loan guaranteed by the CGTMSE for such MSE borrowers. 28.
There are also issues around the unavailability of credit rating for first time MSME borrowers. In this context, the banks have been advised to formulate Board approved policy and start using credit scoring models in their evaluation of the loan proposals of MSE borrowers which works on the principles of attributes of similar borrowers rather than on past or future financials. 29.