Role of Selected Financial Govt. Schemes for Development of MSMEs of Punjab

Finance including Credit Guarantee for Micro & Small Enterprises (CGTMSE): Availability of bank credit without the hassles of collaterals / third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE). The main objective is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed. The other objective is that the lender availing guarantee facility should endeavor to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency. The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSE unit, which availed collateral free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 75 / 80/ 85 per cent of the credit facility. The aim of proposed study is to identify the problems faced by MSMEs in availing benefits under selected government schemes related to finance and to examine their effectiveness. The study is based on both secondary as primary data. Since MSMEs are envisaged to contribute 50 per cent to India’s GDP and create number of jobs, this study would be helpful to encourage New Units & Units not having collateral get opportunity to expand their business by purchase of machines & modernise existing machine to produce Quality product at economic price