The Credit Guarantee Scheme for Stand-Up India (CGSSI) aims to encourage bank lending to Scheduled Caste (SC), Scheduled Tribe (ST), and women entrepreneurs by providing credit guarantee cover.
The scheme, operated by the National Credit Guarantee Trustee Company Ltd. (NCGTC), allows banks to offer collateral-free loans under the Stand-Up India Scheme with reduced risk.
Objective of CGSSI
To guarantee credit facilities extended under the Stand-Up India Scheme, particularly for eligible entrepreneurs from SC/ST categories and women, for loans ranging from ₹10 lakh to ₹100 lakh, without the need for collateral.
Key Features of the Scheme
1. Eligible Credit Facility
- Credit facilities of more than ₹10 lakh and up to ₹100 lakh under Stand-Up India Scheme are covered under CGSSI.
2. Guarantee Cover
- For loans between ₹10 lakh and ₹50 lakh:
80% of the defaulted amount, subject to a maximum of ₹40 lakh. - For loans between ₹50 lakh and ₹100 lakh:
₹40 lakh plus 50% of the default amount above ₹50 lakh, up to a maximum of ₹65 lakh.
3. Guarantee Tenor
- Term Loan: Duration as per the sanctioned loan agreement.
- Working Capital: Valid for 12 months from the date of account opening and renewable every year.
4. Guarantee Fee
- Standard Basic Rate: 0.85% of the sanctioned limit.
- Differential Guarantee Fee: Based on the bank’s NPA % and claim pay-out ratio, in line with CGTMSE Circular No. 107/2015-16 dated January 28, 2016.
- For NPA accounts, the guarantee fee must be paid up to the claim lodgment date.
- Failure to pay the guarantee fee within the stipulated period will result in lapse of CGSSI liability.
Ineligible Cases under CGSSI
CGSSI does not cover the following:
- Loans already guaranteed by DICGC or other government schemes.
- Credit facilities backed by collateral security or third-party guarantees like CGTMSE.
- Loans that are not in conformity with the Stand-Up India Scheme.
Claims under CGSSI
- Claims must be lodged within 2 years from the date of the account becoming Non-Performing Asset (NPA).
- Applicable only after the lock-in period of 18 months from the guarantee start date.
- Account must be recalled, and recovery proceedings must be initiated.
Claim Settlement:
- 75% of the guaranteed amount is paid within 30 days if the claim is in order.
- Remaining 25% is paid after completion of recovery proceedings.
- If CGSSI delays beyond 30 days, it will pay interest at the prevailing Bank Rate.
- Bank must use SARFAESI Act to recover dues. Amount recovered should first be credited to CGSSI Trust.
- If the bank delays refund of claim money, it must repay CGSSI with 4% penal interest above the Bank Rate.
Benefits of CGSSI
- Encourages banks to lend to underserved sectors.
- Promotes SC/ST and women entrepreneurship.
- Enables access to large credit without collateral.
- Minimizes lender risk, making credit flow smoother.
FAQs on CGSSI
Q1: What is the maximum guarantee amount under CGSSI?
A: ₹65 lakh per borrower, depending on the loan amount and default size.
Q2: Can I apply for a ₹7 lakh loan under CGSSI?
A: No. The coverage only guarantees loans above ₹10 lakh.
Q3: Is collateral required?
A: No. Loans must be collateral-free to be eligible for CGSSI.
Q4: When can a claim be filed by the bank?
A: Within 2 years of NPA classification and after the lock-in period of 18 months.
Q5: What happens if the bank delays refund of recovered amounts?
A: The bank must pay 4% penal interest above Bank Rate to CGSSI for the delay.