In order to boost the leading to the Small and Medium Enterprises (SMEs), State Bank of India has waived guarantees and service charges on such loans. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) which is appointed by the Government, acts as guarantor for loans upto Rs. 1 crore.
The Managing Director (National Banking) at SBI, Mr. A. Krishna Kumar said, "The fees are basically a kind of insurance premium. To help clients, we have now decided to pay up to the Trust from our books."
If some loan lent by a bank turns bad than CGTMSE is responsible to pay back 75% of the loan amount to the former. It providers security to the banks.