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).
What is 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.
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