Credit Guarantee Scheme for Startups (CGSS)

Subject :Science and Technology

Context: Center notifies credit guarantee scheme for startups.

Details:

CGSS will complement the existing schemes under Startup India initiative such as Fund of Funds for Startups and Startup India Seed Fund Scheme.

Credit Guarantee Scheme for Startups (CGSS):

Purpose-providing credit guarantees to loans extended by member institutions (MIs) to finance eligible borrowers being startups

By-The Department for Promotion of Industry and Internal Trade (DPIIT).

Time line-loan/debt facilities sanctioned to an eligible borrower on or after 6 October.

Details-

Guarantee covers are–transaction based and umbrella based.
- In respect of transaction-based guarantee cover, the guarantee cover is obtained by the MIs on a single eligible borrower basis.
- Guarantee cover:
  - 80% -original loan sanction amount is up to ₹3 crore,
  - 75% -original loan sanction amount is above ₹3 crore, and up to ₹5 crore, and
  - 65% -original loan sanction amount is above ₹5 crore (up to ₹10 crore per borrower)
- The umbrella-based guarantee cover will provide guarantee to venture debt funds (VDFs) registered under AIF regulations of Sebi.
- Guarantee cover:
  - actual losses or
  - up to a maximum of 5% of Pooled Investment, whichever is lower, subject to a maximum of Rs.10 crore per borrower.
Other bodies instituted-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.

National Credit Guarantee Trustee Company Limited (NCGTC)

National Credit Guarantee Trustee Company Ltd (NCGTC) is a private limited company incorporated under the Companies Act 1956.
In 2014 it was established by the Department of Financial Services, Ministry of Finance, as a wholly owned company of the Government of India, to act as a common trustee company for multiple credit guarantee funds.
It was set up by the Government of India to, inter alia, act as a common trustee company to manage and operate various credit guarantee trust funds.
The following Credit Guarantee Trust Funds are under the trusteeship management of NCGTC:
- Credit Guarantee Fund Scheme for Educational Loans (CGFEL)
- Credit Guarantee Fund Scheme for Skill Development (CGFSD)
- Credit Guarantee Fund Scheme for Factoring (CGFF)
- Credit Guarantee Fund for Micro Units (CGFMU)
- Credit Guarantee Fund for Stand up India (CGFSI)
- Emergency Credit Line Guarantee Scheme (ECLGS)
- Credit Guarantee Scheme for MFIs
- Loan Guarantee Scheme for the Covid affected Tourism Service Sector (LGSCATSS).