Delhi Launches Collateral-Free Loan Scheme for MSMEs
As announced in Delhi’s FY26 Budget, the government has allocated Rs 50 million for the initiative, with an additional Rs 500 million to be contributed in phases in partnership with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
According to Chief Minister Rekha Gupta, the scheme will enable small enterprises and women-led businesses to secure loans without the burden of collateral, reducing their reliance on personal assets and enhancing credit access.
The scheme offers a guarantee coverage structure designed to minimise lenders’ risk and improve credit flow:
Small enterprises: Loans up to Rs 1 billion, with 75 per cent coverage by CGTMSE and 20 per cent by the Delhi government.
Women entrepreneurs and MSMEs promoted by Agniveers: Loans up to Rs 1 billion, with 90 per cent coverage by CGTMSE and 5 per cent by the Delhi government.
Micro enterprises: Loans up to Rs 500,000, with 85 per cent coverage by CGTMSE and 10 per cent by the Delhi government.
Loans between Rs 500,000 and Rs 1 billion: 75 per cent coverage by CGTMSE and 20 per cent by the Delhi government.
This structure ensures borrowers can receive up to 95 per cent total guarantee coverage, significantly lowering the lending risk for financial institutions and easing the process for entrepreneurs seeking capital.
Gupta described the initiative as “a new chapter in Delhi’s economic growth,” noting that it will empower micro, small, and women-led enterprises, and foster entrepreneurship in sectors such as manufacturing, services, retail, and education.
Established in 2000, CGTMSE collaborates with 276 lending institutions and maintains a guarantee portfolio exceeding Rs 9.34 trillion. In FY25, it issued guarantees for 2.7 million loan accounts worth Rs 3.05 trillion, underscoring its pivotal role in strengthening India’s MSME credit ecosystem.