The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry has notified the establishment of the Credit Guarantee Scheme for Startups (CGSS).
- CGSS is aimed at providing credit guarantee up to a specified limit against loans extended by Member Institutions (MIs) to finance eligible borrowers viz. Startups. This scheme would help provide collateral-free debt funding to startups
- The credit guarantee cover under the Scheme would be transaction-based and umbrella based.
- In transaction-based guarantee cover, the guarantee cover is obtained by the MIs on single eligible borrower basis. It will promote lending by Banks/ NBFCs to eligible startups.
- The umbrella-based guarantee cover will provide guarantee to Venture Debt Funds (VDF) registered under AIF regulations of SEBI.
- The exposure to individual cases would be capped at Rs. 10 crore per case or the actual outstanding credit amount, whichever is less.
- DPIIT will be constituting a Management Committee (MC) and a Risk Evaluation Committee (REC) for reviewing, supervising and operational oversight of the Scheme.
- The National Credit Guarantee Trustee Company Limited (NCGTC) will be operating the Scheme.
Source : Times of India