Credit Guarantee Scheme Notified By DPIIT For Startups

Current Affairs

  • The Department for Promotion of Industry and Internal Trade (DPIIT) has notified credit guarantee scheme for startups for providing collateral-free loans. Loan/debt facilities sanctioned to an eligible borrower on or after October 6, would be eligible for coverage under the scheme, according to the notification.
  • CGSS is aimed at providing credit guarantees up to a specified limit against loans extended by Member Institutions to finance eligible borrowers. Startups as defined in the Gazette Notification issued by DPIIT and amended from time to time.
  • The credit guarantee cover under the scheme would be transaction-based and umbrella based. The exposure to individual cases would be capped at Rs.10 crores per case or the actual outstanding credit amount, whichever is less. 
  • In respect of transaction-based guarantee cover, the guarantee cover is obtained by the member institutions on a single eligible borrower basis. Transaction-based guarantees will promote lending by Banks/ NBFCs to eligible startups. The extent of transaction-based cover will be 80 per cent of the amount. 
  • Along with institutional mechanisms for operationalizing the Scheme, DPIIT will be constituting a Management Committee and a risk evaluation Committee for reviewing, supervising, and operational oversight of the scheme. The National Credit Guarantee Trustee Company Limited (NCGTC) will be operating the scheme.

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