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Credit Guarantee scheme for MFI – NCGTC

Government of India, on June 28, 2021, through the Ministry of Finance, Department of Financial Services has formulated the Credit Guarantee Scheme for MFIs to provide 75% guarantee on funding extended by Member Lending Institutions (MLIs) to NBFC-MFIs / MFIs for further on-lending to eligible small borrowers in the context of COVID-19 pandemic. The facility will be guaranteed by National Credit Guarantee Trustee Company Limited (NCGTC), a wholly owned trustee company of Government of India.

Broad scheme features below

Scheme Name Credit Guarantee Scheme for MFI (CGSMFI) (the Scheme)
Validity Till 31st March 2022 or till guarantees for an amount of Rs.7,500 crore are issued under CGSMFI (whichever is earlier)
Eligible MFI NBFC-MFIs / MFIs registered with MFIN or Sa-Dhan
Interest Rate Capped at 1 year MCLR + maximum spread of 2 % p.a.
Guarantee fee & Security required by NCGTC Nil Guarantee fee & No additional security required by NCGTC
Tenor of Guarantee Maximum 3 years
Requirements to be complied by NBFC- MFI / MFI

NBFC-MFI/ MFI to ensure –

  1. 80% of the assistance to be utilized for creation of fresh loan assets & should be created within 4 months from the date of disbursement
  2. ROI on loans granted by borrower (NBFC-MFI / MFI) to eligible small borrower to be min 2% below the maximum rate prescribed by RBI on such loans.
  3. Separate account to be opened for credit facility extended to the eligible small borrowers under the Scheme.
  4. Assistance extended to the eligible small borrowers is as per extant guidelines of RBI.
  5. Submission of statutory auditor certificate to MLI confirming compliance with the above within 4 months from the date of disbursement of each tranche of loan.

Eligible NBFC-MFIs / MFIs may contact their Relationship Manager for further details with respect to the Scheme. Please note that the loan will be subject to internal assessment and completion of documentation prescribed by Standard Chartered Bank.

Disclaimer:

The Management Committee of CGSMFI fund will have the authority to approve any changes to the structure of the Scheme/ operational guidelines and that the Scheme terms and conditions, including but not limited to, the eligibility criteria, guarantee fee, rate of interest, tenor of loans, etc. are subject to change from time to time. Upon any changes to the Scheme, terms and conditions governing the loans extended by Standard Chartered Bank (the “Bank”) may be amended suitably. Although best effort has been made to provide complete and accurate information relating to the Scheme, the Bank makes no warranties, express or implied, or representations as to the accuracy or completeness of the same on the website. You are advised to read the Scheme operational guidelines, FAQs and any other terms governing the Scheme carefully.

For details of the Scheme, please refer to the link provided here  https://www.ncgtc.in/en/products-n-services/cgsmfi