The CGTMSE fee is an Annual Guarantee Fee (AGF). It is what keeps the government guarantee on your collateral-free loan active, and it is charged every year the cover runs, not once.
As of 1 April 2025, the standard fee ranges from 0.37% to 1.20% a year, depending on the size of your loan. It is separate from the interest the bank charges. The fee pays for the guarantee; the interest is the cost of the loan itself.
This guide breaks down the current slabs, shows what the fee works out to in rupees at common loan sizes, and explains who actually pays it.
What the CGTMSE fee actually is
The CGTMSE fee pays for the guarantee that lets you borrow without collateral. Under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), the Trust guarantees a share of your loan to the lender. That guarantee is what removes the need to pledge property.
The Annual Guarantee Fee keeps that cover live. While the guarantee is in place, the fee is payable each year. It is calculated on the loan amount, at a percentage set by your loan’s size slab.
The fee is not the interest rate. CGTMSE does not set your interest rate. Your bank sets that under RBI norms and its own credit assessment. The AGF sits on top, as the price of the guarantee.
Is the CGTMSE fee charged every year?
Yes. The CGTMSE fee is an annual fee, not a one-time charge. As long as the guarantee cover is active on your loan, the fee is due each year.
The basis changes slightly over the life of the loan. In the first year the fee is computed on the guaranteed amount. In later years it is charged on the outstanding loan amount, so as you repay, the rupee fee generally falls.
This is the single most common misunderstanding we see. Borrowers expect a one-off charge like a stamp duty and are surprised by the yearly fee. Knowing it is annual lets you plan for it as a running cost of the facility.
CGTMSE fee structure (effective 1 April 2025)
The standard Annual Guarantee Fee rises with loan size across seven slabs. These are the standard rates published by CGTMSE.
| Loan slab | Standard AGF rate (per year) |
|---|---|
| Up to ₹10 lakh | 0.37% |
| Above ₹10 lakh to ₹50 lakh | 0.55% |
| Above ₹50 lakh to ₹1 crore | 0.60% |
| Above ₹1 crore to ₹2 crore | 0.85% |
| Above ₹2 crore to ₹5 crore | 1.00% |
| Above ₹5 crore to ₹8 crore | 1.10% |
| Above ₹8 crore to ₹10 crore | 1.20% |
These rates apply to guarantees approved or renewed on or after 1 April 2025, per CGTMSE Circular 251/2024-25. The 2025 revision lowered the cost on smaller loans, which makes collateral-free borrowing cheaper for micro and small units than it was a few years ago.
A 10% concession on the standard rate applies to certain borrowers, including women, SC/ST, differently-abled and transgender promoters, and units in the North East, Jammu and Kashmir, Ladakh, Aspirational Districts, or with ZED certification.
What the fee works out to in rupees
The percentage is easier to judge as an actual figure. Below are the first-year fees at the standard rate, before any concession or lender adjustment.
| Loan amount | Slab rate | First-year AGF (standard) |
|---|---|---|
| ₹10 lakh | 0.37% | ₹3,700 |
| ₹25 lakh | 0.55% | ₹13,750 |
| ₹50 lakh | 0.55% | ₹27,500 |
| ₹1 crore | 0.60% | ₹60,000 |
| ₹2 crore | 0.85% | ₹1,70,000 |
| ₹5 crore | 1.00% | ₹5,00,000 |
| ₹10 crore | 1.20% | ₹12,00,000 |
Read against the alternative, the fee is usually modest. A borrower paying ₹60,000 a year on a ₹1 crore loan avoids mortgaging property worth far more to get the same credit. For most micro and small businesses, that trade is worth making.
Who pays the CGTMSE fee, the bank or the borrower?
CGTMSE charges the fee to the lender. The scheme then leaves it to the lender’s discretion whether to pass the cost to the borrower or absorb it. In practice, most banks recover the fee from the borrower, and this is standard and legal.
There is a detail worth knowing before you take the headline slab rate as final. The standard rate is a baseline. CGTMSE assigns each lender a risk category based on the health of its guaranteed portfolio. A strong lender can receive a discount of up to 10% on the standard rate; a higher-risk lender can carry a premium of up to 70%. So the rate on your account can sit a little below or well above the slab figure, depending on which bank you borrow from.
This is exactly the kind of thing a borrower rarely sees coming and a specialist accounts for when matching you to a lender. The headline slab tells you the ballpark. The lender you choose decides where in that range you land.
Is the CGTMSE fee refundable?
The Annual Guarantee Fee itself is generally not refundable once charged for a cover period. It pays for the guarantee that was active during that year, much like an insurance premium.
There is one route worth checking. Some state governments reimburse the CGTMSE fee for local MSMEs as a policy incentive. Whether you qualify depends on your state, your sector, and the scheme’s current terms, so it is worth confirming before you assume the fee is a sunk cost.
How Vibhuti Finserv helps
We confirm your eligibility, estimate your likely fee at the right slab, and match you to a lender whose terms suit your case, then prepare the file for sanction. Sanction targets 48 to 72 hours once documents are complete, subject to the lender’s credit assessment.
Check your eligibility or learn more on our CGTMSE scheme page.
Related reading: who qualifies for a CGTMSE loan and how to apply for a CGTMSE loan, step by step.
Frequently asked questions
What is the CGTMSE fee?
It is the Annual Guarantee Fee (AGF) that keeps the government guarantee active on a collateral-free CGTMSE loan. It is charged as a percentage of the loan each year and is separate from the bank's interest rate.
Is the CGTMSE fee charged every year?
Yes. It is an annual fee, payable each year the guarantee is in place. The first year is computed on the guaranteed amount, and later years on the outstanding loan balance, so the rupee fee generally reduces as you repay.
How much is the CGTMSE fee for a ₹1 crore loan?
At the standard rate for the ₹50 lakh to ₹1 crore slab (0.60% per year, as of 1 April 2025), the first-year fee on a ₹1 crore loan is ₹60,000. The actual figure can vary with your lender's risk category and any concession you qualify for.
Who pays the CGTMSE fee, the bank or the borrower?
CGTMSE charges the lender, and the scheme lets the lender decide whether to pass the cost to the borrower or bear it. In practice, most banks recover it from the borrower, which is standard.
Is the CGTMSE fee refundable?
The fee itself is generally not refundable, since it pays for the guarantee active during that year. However, some state governments reimburse the fee for eligible local MSMEs, so it is worth checking your state's scheme.
Is the CGTMSE fee the same as the loan interest rate?
No. CGTMSE does not set your interest rate. The bank sets interest under RBI norms and its own assessment. The Annual Guarantee Fee is a separate charge for the guarantee that removes the collateral requirement.