Credit Guarantee Scheme for Startups (CGSS)
- October 8, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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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).