<div align="justify">The central government is formulating a Credit Guarantee Scheme for Startups (CGSS) with a corpus fund of Rs 2,000 crore that will enable startups raise loans without any collateral for their business purposes.<br /><br />The proposed scheme will provide credit guarantee up to Rs 5 crore per case inclusive of term loan, working capital or any other instrument of assistance extended by Member Lending Institutions (MLIs) to finance an eligible borrower i.e. a startup recognised by the Department of Industrial Policy and Promotion (DIPP).<br /><br />The scheme will provide benefit to a startup recognised by DIPP as per Gazette Notifications issued from time to time. For all resident Directors/Partners, Aadhaar shall be mandatory and for non-resident directors/partners, the passport number shall be a mandatory part of KYC norms, Commerce and Industry Minister Nirmala Sitharaman said in a written reply in Rajya Sabha on Wednesday.<br /><br />Member Lending Institutions under the scheme can be Scheduled Commercial Banks and Financial Institutions, RBI registered Non-Banking Financial Companies (NBFCs) and SEBI registered AIFs among others. The scheme will function under the trusteeship management of the National Credit Guarantee Trustee Company (NCGTC).<br /><br />The scheme shall provide portfolio-based credit guarantee. Each portfolio shall comprise at least 10 eligible start up loans, during a particular Financial Year. Coverage would be extended to the portfolio and the portfolio loss would be reckoned against the “net cash losses” during the portfolio life.<br /><br />Instruments of assistance could be in the form of venture debt, working capital, debentures and Optionally Convertible debt among others.<br /><br />MLIs may provide loans up to any amount required by an eligible borrower. However, under the scheme the exposure for availing credit guarantee shall be limited to Rs 5 crore per eligible borrower. Such loan will be extended by MLIs without any collateral security and/or third party guarantee.<br /><br />The Management Committee shall be responsible for the overall supervision and monitoring of the Credit Guarantee Scheme for startups. A Risk Evaluation Committee (REC) shall also be formed to address conflict of interest issues.<br /></div>
<div align="justify">The central government is formulating a Credit Guarantee Scheme for Startups (CGSS) with a corpus fund of Rs 2,000 crore that will enable startups raise loans without any collateral for their business purposes.<br /><br />The proposed scheme will provide credit guarantee up to Rs 5 crore per case inclusive of term loan, working capital or any other instrument of assistance extended by Member Lending Institutions (MLIs) to finance an eligible borrower i.e. a startup recognised by the Department of Industrial Policy and Promotion (DIPP).<br /><br />The scheme will provide benefit to a startup recognised by DIPP as per Gazette Notifications issued from time to time. For all resident Directors/Partners, Aadhaar shall be mandatory and for non-resident directors/partners, the passport number shall be a mandatory part of KYC norms, Commerce and Industry Minister Nirmala Sitharaman said in a written reply in Rajya Sabha on Wednesday.<br /><br />Member Lending Institutions under the scheme can be Scheduled Commercial Banks and Financial Institutions, RBI registered Non-Banking Financial Companies (NBFCs) and SEBI registered AIFs among others. The scheme will function under the trusteeship management of the National Credit Guarantee Trustee Company (NCGTC).<br /><br />The scheme shall provide portfolio-based credit guarantee. Each portfolio shall comprise at least 10 eligible start up loans, during a particular Financial Year. Coverage would be extended to the portfolio and the portfolio loss would be reckoned against the “net cash losses” during the portfolio life.<br /><br />Instruments of assistance could be in the form of venture debt, working capital, debentures and Optionally Convertible debt among others.<br /><br />MLIs may provide loans up to any amount required by an eligible borrower. However, under the scheme the exposure for availing credit guarantee shall be limited to Rs 5 crore per eligible borrower. Such loan will be extended by MLIs without any collateral security and/or third party guarantee.<br /><br />The Management Committee shall be responsible for the overall supervision and monitoring of the Credit Guarantee Scheme for startups. A Risk Evaluation Committee (REC) shall also be formed to address conflict of interest issues.<br /></div>
