Government Operationalises CGTMSE Guarantee Cover for TReDS MSME Receivables

Key facts

• The government has operationalised the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) guarantee cover for eligible Trade Receivables Discounting System (TReDS) receivables, reducing lending risk for financiers and improving working capital access for micro and small enterprises.
• The measure was announced in the Union Budget 2026-27 and provides guarantee support to banks and financiers lending against eligible invoices raised by micro and small enterprises.
• M1xchange became the first TReDS platform to operationalise the CGTMSE guarantee mechanism and completed the first transaction backed by the credit guarantee cover.
• Under the digital process, financiers can check invoice eligibility, apply for cover, and the system automatically calculates the guarantee fee and generates the cover note.
• The Reserve Bank of India's (RBI) 2026 TReDS framework permits financiers to avail guarantee cover from eligible government-established credit guarantee trusts.