All about National Credit Guarantee Trustee Company Limited (NCGTC)

National Credit Guarantee Trustee Company Limited (NCGTC) is a private company under the Companies Act 1956. The Department of Financial Services established it. It is a company that the Government of India owns.

NCGTC is a trustee company that provides multiple credit guarantee funds. It has its headquarters in Mumbai. It was established with a paid-up capital of Rs. 10 crores.

What are Credit Guarantee Programmes?

Credit Guarantee Programmes are structured so that it shares the lending risk of the lenders. It also provides financial access to borrowers.

NCGTC aims to manage various guarantee schemes under a huge Government-sponsored financial inclusion program.

The program includes cross-sections and segments of the economy like students, small business owners, business women, SMEs, skill and vocational training, etc.

What are the different Credit Guarantee Trusts under NCGTC?

NCGTC has different credit guarantee trusts that facilitate credit disbursement to the needy and fulfill their needs. NCGTC solely manages all the credit guarantee trusts.

The five important credit guarantee trusts under NCGTC are

Credit Guarantee Fund Scheme for Educational Loans (CGFEL)

• The CGFEL scheme guarantees Education Loans by the member banks of IBA.
• The loans provided are up to ₹ 7.5 lakh, which lending institutions can extend to eligible borrowers without any collateral or third-party guarantee.

Credit Guarantee Fund Scheme for Skill Development (CGFSD)

• The CGFSD scheme is for Skill Development Loans provided by the member banks of IBA.
• The loans disbursed are up to ₹ 1.5 lakh, which lending institutions can duly extend to eligible borrowers without any collateral or third-party guarantee.

Credit Guarantee Fund Scheme for Factoring (CGFF)

The CGFF scheme is given for domestic factored debts of MSMEs.

Credit Guarantee Fund for Micro Units (CGFMU)

• The CGFMU scheme is for loans up to the specified current limit of Rs. 10 Lakhs.
• These loans are sanctioned by Banks / NBFCs / MFIs / other financial intermediaries.
• These financial institutions engage in providing credits to eligible micro-enterprises.
• An overdraft loan of Rs. 10,000/- is sanctioned under PMJDY accounts, which can be covered under the Credit Guarantee Fund.

Credit Guarantee Fund for Stand Up India (CGFSI)

• The CGFSI scheme is for credits of more than Rs. 10 lakh, and it is provided for upto ₹100 lakh.
• The eligible lending institutions disburse the above credits under the Stand Up India Scheme.
• The Stand Up India Scheme includes Greenfield Enterprises for SC/ST/Women.

Some credit guarantee schemes have been launched after the pandemic and lockdown under NCGTC; they are,

Emergency Credit Line Guarantee Scheme (ECLGS)

• ECLGS Scheme was a special scheme that was launched to provide working capital to businesses that were adversely affected by lockdown during the COVID-19 pandemic.
• The scheme ensures 100% guarantee coverage to Banks & NBFCs.
• The guarantee coverage is expected on credit extended to Business Enterprises/MSMEs on their loan outstanding as on February 29, 2020, subject to defined criteria, to meet their additional term loan/additional working capital requirements.

Credit Guarantee Scheme for MFIs (CGSMFI)

• The CGSMFI Scheme is a relief to the Scheduled Commercial Banks and AIFIs as they provide guaranteed funding coverage.
• They provide the funding to NBFC-MFIs or MFIs for lending credits to eligible small borrowers.

Loan Guarantee Scheme for COVID Affected Sectors (LGSCAS)

• The LGSCAS Scheme is designed to provide guarantee coverage for the funding provided by Scheduled Commercial Banks to eligible projects in the healthcare sector.
• These funds are provided in non-metropolitan areas to establish or expand hospitals/dispensaries/clinics/medical colleges/pathology labs/diagnostic centers.
• These funds were also given for incorporating facilities for manufacturing vaccines/oxygen/ventilators/priority medical devices.
• Some of the funds under the scheme were provided to develop public healthcare facilities.
• The scheme provides a guarantee coverage to brownfield and greenfield projects, subject to a maximum loan of ₹100 crores per project.
• The guarantee coverage given by NCGTC would be 50% (75% in case of projects coming up in aspirational districts) in case of brownfield projects and 75% in case of greenfield projects.

Loan Guarantee Scheme for COVID Affected Tourism Service Sector (LGSCATSS)

• The LGSCATSS Scheme provides guarantee coverage for loans provided by Scheduled Commercial Banks to registered Tourist Guides (recognized/ approved by M/o Tourism and State Govts/ UT Administrations) and Travel & Tourism Stakeholders recognized/ approved by the Ministry of Tourism, Government of India.
• It is to discharge liabilities and restart the business affected due to Covid -19 pandemic.

The above nine trusts form the base of NCGTC as they provide a committed credit guarantee corpus of Rs.79,950 crore.

What is the extent of Credit Guarantee Cover?

The following are the time frame of the Credit Guarantee Cover:

• For Microloans sanctioned up to March 31, 2020
• The First Loss is calculated as up to 5% of the crystallized portfolio of the MLI, which will be borne by the MLI and hence, cannot be claimed.
• In the remaining portion, the ‘extent of guarantee’ will be 50% of the “Amount in Default.”
• The above is subject to a maximum capital of 15% of the crystallized portfolio.
• For Micro Loans sanctioned during FY 2020-21 and Later.
• The First loss is up to 3% of the amount in default. The MLI will bear it and hence, cannot be claimed.
• In the remaining portion, the “extent of guarantee‟ will be 75% of the “Amount in Default.”
• It is subject to a maximum payout capital of 15% of the crystallized portfolio.
• For Guaranteed Portfolio on Loans extended to SHGs
• The extent of the guarantee will be 75% of the amount in default. There is no First Loss.

Financial bodies like NCGTC are a boon to the nation. The credits and loans from NCGTC have helped many lower strata people and micro business owners get back up after the dreadful lockdown and pandemic attack on the country.

The above credit guarantee trusts and schemes have helped numerous citizens in India to start and establish their businesses and their life. The support of the Government of India through financial bodies like NCGTC instills trust and hope in the people of India.

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