New Delhi, Jan. 27 -- In a significant step towards strengthening small and micro enterprises in the national capital, the Delhi Government has taken a major policy initiative. On Tuesday, in the presence of Chief Minister Smt. Rekha Gupta at the Delhi Secretariat, a Memorandum of Understanding (MoU) was signed between the Government of Delhi and the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for the implementation of the Delhi Credit Guarantee Scheme.
The primary objective of the scheme is to address the biggest challenge faced by small entrepreneurs' access to bank credit by enabling them to avail loans without providing any collateral or security. The Chief Minister stated that the initiative would not only ease access to capital for entrepreneurs but also significantly reduce the risk borne by banks, thereby encouraging them to lend to small businesses without hesitation. She noted that the scheme would improve Delhi's business environment, promote innovation, generate employment and help build a more inclusive urban economy.
Collateral-free loans up to Rs.10 crore
Industry Minister Shri Manjinder Singh Sirsa and senior officials from the concerned departments were present on the occasion. The Chief Minister highlighted that CGTMSE has emerged as a trusted national institution facilitating collateral-free credit for micro and small enterprises. She said that lakhs of young people in Delhi aspire to launch start-ups and ventures in manufacturing, services and allied sectors, but often struggle due to a lack of financial support. Following the signing of this MoU, such entrepreneurs will now be able to access loans of up to Rs.10 crore without furnishing any collateral.
Reduced risk for banks
Explaining the operational details of the scheme, the Chief Minister stated that under the Delhi Credit Guarantee Scheme, the responsibility for loan guarantees will be jointly shared by the Government of Delhi and CGTMSE. Of the total loan amount, CGTMSE will provide a guarantee cover of 75 to 90 per cent, while the remaining portion will be secured by the Delhi Government. As a result, up to 95 per cent of the loans extended by banks will be government-guaranteed, reducing the banks' exposure to just 5 per cent and enabling them to lend more confidently to small businesses.
Entrepreneurs from all sectors eligible
The Chief Minister further explained that the scheme will cover a wide range of sectors, including manufacturing, services, retail, education and skill-training institutions. A dedicated fund of Rs.50 crore has been created for this purpose. Leveraging this limited corpus, banks will be able to extend loans amounting to nearly Rs.2,500 crore. The fund may be enhanced in the future, if required.
She added that the scheme has been designed with a leverage ratio of 50:1, meaning that an investment of Rs.2 crore can facilitate loans worth up to Rs.100 crore. An NPA ceiling of 10 per cent has also been fixed to ensure that the government's fiscal risk remains limited.
The Chief Minister stated that the government initially aims to reach one lakh beneficiaries under the scheme. However, CGTMSE has clarified that there will be no cap on the number of beneficiaries. Any eligible small entrepreneur in Delhi who fulfils the scheme's criteria will be able to avail a loan backed by the Delhi Government's guarantee.
Special support for women entrepreneurs
The Chief Minister emphasised that the MoU will enable micro and small entrepreneurs to access credit easily without collateral. Special assistance will be extended to first-time entrepreneurs and women entrepreneurs to encourage wider participation in entrepreneurial activity. The initiative is expected to create new employment opportunities and foster a robust and sustainable MSE ecosystem in Delhi.
She added that the collaboration between CGTMSE and the Delhi Government presents a significant opportunity to advance inclusive economic growth in the capital. The vision of a Developed India can only be realised when Delhi becomes a developed city, and this scheme lays a strong foundation in that direction.
Industry Minister Shri Manjinder Singh Sirsa described the initiative as a historic gift for Delhi's industrial and economic future. He said the scheme represents a major structural reform for nearly one million MSMEs in Delhi, including over 200,000 manufacturing units. He noted that traditional banking practices such as excessive documentation, property-related paperwork and collateral requirements have long posed barriers to credit access, particularly for women entrepreneurs. Addressing these challenges, the Delhi Government under the leadership of Chief Minister Smt. Rekha Gupta has taken a decisive step.
Calling the provision of collateral-free loans of up to Rs.10 crore a game-changer, the Industry Minister clarified that the government's objective is not merely credit disbursal, but to empower MSMEs for large-scale investment and long-term expansion.
Published by HT Digital Content Services with permission from Millennium Post.