Credit Enhancement Guarantee Scheme for Scheduled Castes

Credit Enhancement Guarantee Scheme for Scheduled Castes

The Credit Enhancement Guarantee Scheme for Scheduled Castes (CEGSSC) was introduced in the Union Budget of 2014-15 as part of the social sector initiatives by the Ministry of Social Justice & Empowerment (MoSJE), Government of India. The scheme, initially funded with a corpus of Rs. 200 crores, aims to foster entrepreneurship among Scheduled Castes (SC) by providing credit enhancement guarantees to Member Lending Institutions (MLIs).

Objectives

The primary objective of the CEGSSC scheme is to promote entrepreneurship among SC entrepreneurs by offering credit enhancement guarantees to MLIs providing financial assistance to them.

Implementation

IFCI Ltd serves as the Nodal Agency for implementing the scheme and issuing guarantees to MLIs. The MLIs are then encouraged to finance SC entrepreneurs.

Eligibility

Under the scheme, various entities belonging to Scheduled Castes, including Individuals, Sole Proprietorships, Registered Companies, Partnerships, and Societies, can avail benefits for Term Loan, Composite Term Loan, or Working Capital facilities.

Loan Limits and Guarantee Covers

  • Loans can be availed from Rs.15 lakhs to more than Rs.5 crore.
  • Guarantee covers vary:
    • Rs.15 lakhs to Rs.1 crore: 100% guarantee cover
    • Rs.1 crore to Rs.2 crore: 80% guarantee cover
    • Rs.2 crore to Rs.5 crore: 70% guarantee cover
    • Above Rs.5 crore: 60% guarantee cover, up to a maximum of Rs.5 crore.

Application Process

SC entrepreneurs or entities promoted by them must approach MLIs/Banks for loans, and MLIs/Banks can then avail guarantees under the CEGSSC scheme.

Eligibility Criteria for Companies/Societies/Firms

Companies/Societies/Firms must have more than 51% shareholding by Scheduled Caste entrepreneurs/promoters/members, with management control, and a minimum existence of 6 months.

Security Requirements

No collateral security is required for availing loans under the scheme. The loans are covered by assets created from the loan and the pledge of promoters’ shareholdings.

Repayment Period

The maximum repayment period is 7 years, or the repayment period, whichever is earlier. Initially, the loan is guaranteed for 1 year and can be renewed yearly.

Fees and Renewal

An annual renewal fee is payable by Banks/MLIs, ranging between 0.20% p.a. to 0.75% p.a., depending on the loan amount. For SC women and SC divyang entrepreneurs, the fees range from 0.10% p.a. to 0.50% p.a.

List of Participating Banks

Several prominent banks across India participate in the CEGSSC scheme, including State Bank of India, Bank of Baroda, Union Bank of India, and others.

Impact (as of 31.1.2024)

  • Cumulatively, 66 entities promoted by SC entrepreneurs have been sanctioned a guarantee cover of approximately Rs. 72 crore against a bank loan of about Rs. 109 crore.
  • Approximately 4049 direct and indirect employments have been generated through CEGSSC, including direct employees, workers, suppliers, vendors, and other support services.

Multiple Choice Questions (MCQs):

  1. What is the primary objective of the Credit Enhancement Guarantee Scheme for Scheduled Castes (CEGSSC)?
    • a. Poverty alleviation
    • b. Promotion of entrepreneurship among SC entrepreneurs
    • c. Educational empowerment
    • d. Healthcare improvement
    Answer: b. Promotion of entrepreneurship among SC entrepreneurs
  2. Which institution serves as the Nodal Agency for implementing the CEGSSC scheme?
    • a. Reserve Bank of India
    • b. Ministry of Finance
    • c. IFCI Ltd
    • d. National Bank for Agriculture and Rural Development (NABARD)
    Answer: c. IFCI Ltd
  3. What is the maximum guarantee cover available for loans above Rs. 5 crore under CEGSSC?
    • a. 50%
    • b. 60%
    • c. 70%
    • d. 80%
    Answer: b. 60%
  4. What eligibility criteria must Companies/Societies/Firms meet to avail benefits under the CEGSSC scheme?
    • a. Minimum 1-year existence
    • b. More than 51% shareholding by Scheduled Caste entrepreneurs/promoters/members
    • c. No management control requirement
    • d. Collateral security of 51%
    Answer: b. More than 51% shareholding by Scheduled Caste entrepreneurs/promoters/members
  5. What is the maximum repayment period for loans under the CEGSSC scheme?
    • a. 5 years
    • b. 7 years
    • c. 10 years
    • d. 12 years
    Answer: b. 7 years