The Credit Enhancement Guarantee Scheme for the Scheduled Castes is an initiative by the Ministry of Social Justice and Empowerment aimed at fostering entrepreneurship among Scheduled Caste (SC) entrepreneurs. The scheme encourages innovation and the adoption of growth technologies by providing a guarantee cover on loans—ranging from a minimum of ₹0.15 crore to a maximum of ₹5.00 crore—granted by designated Money Lending Institutions (MLIs). By mitigating credit risk, the scheme supports working capital loans, term loans, and composite term loans for SC enterprises, thereby promoting financial inclusion, economic development, and employment generation within the SC community.
Benefits
- Guarantee Cover:
- Overall: A guarantee cover ranging from a minimum of ₹0.15 crore to a maximum of ₹5.00 crore is available.
- For Individual SC Entrepreneurs: They can receive guarantee cover on loans up to ₹1.00 crore.
- Tenure of Guarantee:
- The guarantee cover is available for a maximum of 7 years or the repayment period of the loan—whichever is earlier.
- Initially, the guarantee is provided for 1 year and can be renewed annually (subject to payment of annual renewal fees and satisfactory loan performance).
- Repeat Credit Enhancement:
- On successful post-liquidation of the initial facility and maintaining a satisfactory track record, the scheme may be extended to cover repeat financing, thereby encouraging a healthy credit culture among SC entrepreneurs.
Eligibility
Eligible borrowers under the scheme include:
- Type of Borrowers:
- Registered Companies/Partnership Firms: Must have more than 51% shareholding by SC promoters and be under management control of SC entrepreneurs for at least the past six months.
- Registered Societies: Registered under the Society Act, carrying out business in line with Bank/FI policies, with over 51% SC shareholding for at least six months.
- Sole Proprietorship Firms/Individual SC Entrepreneurs: Individual SC entrepreneurs are also eligible. They are provided a guarantee cover on loans of up to ₹1.00 crore.
- Additional Conditions:
- The SC promoters, partners, or members must maintain at least a 51% shareholding in the company/enterprise throughout the currency of the loan.
- Documentary proofs of SC status must be submitted at the time of proposal submission.
- The scheme covers enterprises in the primary, manufacturing, and services sectors.
- The guarantee is extended only on loans sanctioned by MLIs. Banks or Financial Institutions must submit a copy of the valid sanction letter/LoI to IFCI via the designated web portal (CEGSSC).
Guarantee Details and Lock-in Period
- Lock-in Period:
- The guarantee cover has a lock-in period of 12 months from the date of the last disbursement. No claim under the guarantee will be entertained if the underlying account becomes NPA during this period.
- Loan Coverage:
- The term “Loan” includes working capital loans, term loans, or composite term loans granted to SC enterprises by the MLIs.
- Guarantee Fee & Obligations:
- Cost to GOI:
- An upfront fee of 1.5% (exclusive of applicable taxes) is paid by the Government of India to IFCI for the initial corpus (first corpus being ₹200 crore).
- Annual maintenance fees of 0.50% per annum (exclusive of applicable taxes) will be levied on the aggregate outstanding guarantee as of 31st March every year.
- Cost to MLIs:
- MLIs will be charged a guarantee fee for the first year and annual renewal fees on the outstanding guarantee commitment at the beginning of each financial year. Non-payment of renewal fees will result in penal interest at four percent over the IFCI Benchmark Rate.
- Cost to GOI:
Application Process
The application process is conducted online through the designated portal:
- Enter Enterprise Details:
- Fill in all mandatory fields regarding the enterprise, including business details and SC promoter information.
- Enter Borrower Details:
- Provide detailed information about the borrower along with necessary loan details.
- Loan and Bank Details:
- Complete the required sections with loan, bank, and financial details.
- Document Upload:
- Upload all requested documents in the specified format and size.
- Submit Application:
- Save your entries and submit the application through the portal.
Documents Required
- Documentary proofs confirming Scheduled Caste status of the entrepreneur/promoters/partners.
- Valid sanction letters/LoI from the MLIs for the underlying loan.
- Other supporting documents as required by the appraisal format and due diligence module (detailed in Annexure-III and Annexure-IV of the scheme guidelines).
Frequently Asked Questions
- What types of sectors does the scheme cover?
The scheme covers enterprises in the primary, service, and manufacturing sectors. - I am a transgender; am I eligible for the scheme?
The scheme is specifically for Scheduled Caste entrepreneurs. Eligibility for transgender individuals would depend on whether they meet the SC criteria as per the prescribed guidelines. - Which types of borrowers can be covered under the scheme?
Eligible borrowers include registered companies, partnership firms, registered societies, sole proprietorship firms, and individual SC entrepreneurs with more than 51% SC shareholding/control. - Are individual and sole proprietorship firms eligible?
Yes, individual SC entrepreneurs and sole proprietorship firms are eligible. - Are one-person companies eligible?
Eligibility of one-person companies would depend on whether the company meets the shareholding and management control conditions specified in the guidelines. - Can the borrower approach any bank for the guarantee cover?
Only MLIs (designated Money Lending Institutions) that are part of the scheme can extend the guarantee cover. - Is working capital loan eligible for coverage under the scheme?
Yes, the guarantee cover extends to working capital loans, term loans, and composite term loans. - What collateral security is required for the loan?
Collateral requirements are determined by the MLIs. The guarantee cover is an enhancement mechanism, and the underlying loan’s security is subject to the MLIs’ policies. - Is a third-party guarantee required for the loan?
The scheme provides a credit enhancement guarantee; third-party guarantees would be subject to the specific terms of the underlying loan. - What is the maximum quantum of the loan provided under the scheme?
Individual SC entrepreneurs can secure guarantee cover for loans up to ₹1.00 crore; overall guarantee cover under the scheme ranges from ₹0.15 crore to ₹5.00 crore. - What documentation is required for a bank to become an MLI?
MLIs must submit relevant institutional documentation as per the scheme guidelines. Detailed formats are provided in the appraisal and due diligence module (Annexure-III and Annexure-IV). - What is the interest rate charged to borrowers for loans under this scheme?
The interest rate is determined by the respective MLIs, subject to their lending policies. - What is the maximum tenure of the guarantee cover under the scheme?
The guarantee cover is provided for a maximum of 7 years or the loan repayment period, whichever is earlier.