Credit Guarantee Trust for Micro and Small Enterprise ( CGTMSE) , is a trust set up by Government of India under SIDBI to provide guarantee to loans sanctioned by Banks and NBFCs to Micro Small and Medium Enterprise ( MSME) . As per the guarantee , if the loan turns NPA , the trust would provide 75% of the loan amount in the form of guarantee up to the loan of Rs 200 lacs . The IBC recovery rate is around 25% . Since collateral is not available for this loan , banks and NBFCs are not lending under the scheme as they feel that default rate would go up in this scheme due to non availability of collateral . However , this programme has the potential of solving the funding problems of MSME in India and can transform the economic growth path of India . Please analyse the above situation based on the discussion we had under credit risk management course and give proper analytical solutions to the above problem