Entrepreneurship Development

ENTREPRENEURSHIP DEVELOPMENT FOR RURAL FAMILIES 4(1+3)

Lesson 9 : NSIC-Schemes for promoting entrepreneurship development

Credit Guarantee Fund scheme for micro and small enterprises

• The Scheme was launched in August 2000 to ensure better flow of credit to micro and small enterprises by minimizing the risk perception of financial institutions and banks in lending without collateral security.
• Under the scheme, guarantee cover is provided to security free credit facility extended by member lending institutions (MLIs) to the new as well as existing micro and small enterprises on loans up to Rs.50 lakh.
• The guarantee cover available is up to 75% of the loans extended. The extent of guarantee cover is 80% for (i) micro enterprises for loans up to Rs.5 lakh; (ii) MSEs operated and/or owned by women; and (iii) all loans in the North-East Region.
• The lending institutions availing guarantee from the Trust have to pay one time guarantee fee of 1.5% and service charges of 0.75% per annum of the credit facility sanctioned.
• For loans up to Rs.5 lakh, the onetime guarantee fee is 1% and service charges are 0.5% per annum of the credit facility sanctioned.