Why in the News?
The Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, has announced the expansion of the Credit Guarantee Scheme for Startups (CGSS).
About Credit Guarantee Scheme for Startups (CGSS):
- The CGSS was launched on October 6, 2022, as part of the Startup India Action Plan.
- The scheme is designed to provide collateral-free credit to eligible startups through recognized financial institutions.
- It offers credit guarantee cover for loans extended by Scheduled Commercial Banks, All India Financial Institutions (AIFIs), Non-Banking Financial Companies (NBFCs), and SEBI-registered Alternative Investment Funds (AIFs).
- The guaranteed coverage is available in 2 formats:
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- Transaction-based (for individual borrowers) and
- Umbrella-based (for Venture Debt Funds).
- The scheme helps startups access funding through instruments such as working capital, term loans, and venture debt.
- The DPIIT is responsible for the oversight and implementation of the scheme.
- The scheme is operated by the National Credit Guarantee Trustee Company Limited (NCGTC).
- A Management Committee (MC) and a Risk Evaluation Committee (REC) have been constituted to supervise and review the operations of the scheme.
- It aligns with the objective of encouraging innovation, supporting early-stage entrepreneurship, and driving economic self-reliance.
Key Changes in the Expanded CGSS:
- Guarantee ceiling increased from ₹10 crore to ₹20 crore per borrower.
- Guarantee cover enhanced to:
- 85% for loans up to ₹10 crore.
- 75% for loans exceeding ₹10 crore.
- Annual Guarantee Fee (AGF) reduced from 2% to 1% p.a. for startups in 27 Champion Sectors.
- The Champion Sectors are identified under the ‘Make in India’ initiative to strengthen domestic manufacturing and services.
| [UPSC 2023] Consider the following statements with reference to India:
1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006’, the ‘medium enterprises’ are those with investments in plant and machinery between Rs. 15 crore and Rs. 25 crore. 2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector. Which of the statements given above is/are correct? Options: (a) 1 only (b) 2 only* (c) Both 1 and 2 (d) Neither 1 nor 2 |
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