Credit Enhancement Guarantee Scheme For The Scheduled Castes

From Prelims Sureshots » Schemes & Welfare Initiatives

Introduction: Credit Enhancement Guarantee Scheme for the Scheduled Castes, implemented by the Ministry of Social Justice and Empowerment to promote entrepreneurship among the Scheduled Castes.

Ministry/Agency: Ministry of Social Justice and Empowerment.

Objectives:

To enhance entrepreneurship among the Scheduled Castes who are motivated for innovation and growth of the technologies.
To promote the financial inclusion of SC entrepreneurs and motivate them towards further growth of SC communities.
To facilitate the economic development of SC entrepreneurs.
To develop direct and indirect employment generation for the SC population in India.

Benefits:

Credit Enhancement Guarantee (minimum Rs.0.15 crore and maximum Rs.5.00 crore) against Working Capital Loans, Term Loans or Composite Terms Loans granted by Members Lending Institutions (MLIs) to SC entrepreneurs.
A guarantee cover of a loan amount of up to Rs.1.00 crore for individual SC entrepreneurs.
Tenure of guarantee for a maximum of 7 years or repayment period, whichever is earlier.
Repeat credit enhancement in case of a satisfactory track record.

Eligibility:

Enterprises, projects/units being set up, promoted and run by Scheduled Castes in primary, manufacturing and services sector ensuring asset creation.
Registered companies and societies/registered partnership firms/sole proprietorship firms/individual SC entrepreneurs having more than 51% shareholding by Scheduled Caste entrepreneurs/promoters/members with management control for the past 6 months.
Credit guarantee would be extended to start-up SC entrepreneur.
Documentary proofs of being SC are mandatory.
The Scheduled Caste promoter(s)/partners/society members shall not dilute their stake below 51% in the company/enterprise during the currency of the Loan.

Implementation Strategy:

Credit Enhancement Guarantee Scheme (CEGSSC) would be implemented through IFCI Limited.
Upfront fee @1.5% flat (exclusive of applicable taxes) for initial set-up of the corpus for implementing the scheme shall be paid by GOI to IFCI.
Annual maintenance fees @ 0.50% p.a. (exclusive of applicable taxes) shall be levied by IFCI on the aggregate guarantee outstanding as on 31st March every year towards annual maintenance of the scheme.
MLIs would pay a guarantee fee to IFCI on the guarantee cover provided for the First Year and then annual renewal fees of the outstanding Guarantee commitment/obligation.