Delhi Offers Rs 10 Crore Collateral-Free Loans to Boost Entrepreneurs

Seen as a step towards strengthening small and micro enterprises in the national capital, the Memorandum of Understanding (MoU) was signed between the Government of Delhi and the Central government's 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 help small entrepreneurs avail loans without providing any collateral or security, said the Chief Minister.

She said 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.

CM Gupta 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, she added.

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.

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, she said.

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.

Industry Minister 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.

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.

- IANS