DPIIT notifies credit guarantee scheme for startups

• ByStartupStory     |    October 9, 2022

For the purpose of offering loans without collateral, the Department for Promotion of Industry and Internal Trade (DPIIT) has announced a credit guarantee programme for entrepreneurs. According to the announcement, the scheme will cover loan/debt facilities granted to a qualified borrower on or after October 6.

The DPIIT stated that the “Credit Guarantee Scheme for Startups (CGSS) has been approved by the federal government to provide credit guarantees on loans granted by member institutions (MIs) to support eligible borrowers who are startups.

Financial intermediaries (banks, financial institutions, NBFCs, and AIFs) that participate in lending or investing and meet the qualifying requirements outlined in the plan are considered MIs.

The credit facility being covered here shouldn’t have been protected under any other guarantee plan, it stated, and the maximum guarantee cover per borrower cannot exceed Rs 10 crore.

The government would establish a trust or fund, run by the Board of National Credit Guarantee Trustee Company Ltd as the Fund’s Trustee, to guarantee payment against default in loans or debt provided to qualified borrowers. A management committee will be established by the department to handle the trust’s business.

The DPIIT sought opinions on Friday regarding concerns with founding and operating a business as well as the decriminalisation of small infractions under various provisions/sections. The organisation stated in a statement that its goal was to “create ‘New India’ a desired investment destination across the globe and assure hassle-free service delivery to the final beneficiary.”

Getting permissions and approvals, renewing certificates and licences, decriminalising minor offences, and applying for and paying incentives are some of the major categories. The other topics include filings/returns, audits/inspections, online systems/processes, keeping registers and records, and issues pertaining to procedures/guidelines.

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