- 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.
Credit Guarantee Scheme Notified By DPIIT For Startups
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