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, Government of India. With an initial corpus of Rs. 200 crores, this scheme aims to provide a credit boost to SC entrepreneurs, offering a crucial stepping stone toward their economic empowerment.
As of January 31, 2024, the CEGSSC has already made a tangible impact. Cumulatively, 66 entities promoted by SC entrepreneurs have been granted guarantee cover, amounting to approximately Rs.72 crore against a bank loan of around Rs.109 crore nationwide. This has resulted in the generation of approximately 4049 direct and indirect employments, encompassing direct employees, workers, suppliers, vendors, and other support services.
The primary objective of CEGSSC is to promote entrepreneurship among SC individuals by providing Credit Enhancement Guarantee to Member Lending Institutions (MLIs), facilitating financial assistance to SC entrepreneurs. IFCI Ltd serves as the Nodal Agency responsible for implementing the scheme and issuing guarantees to MLIs, encouraging them to finance SC entrepreneurs.
Under the scheme, individuals, sole proprietorships, registered companies, partnerships, and societies belonging to Scheduled Castes can avail themselves of benefits through MLIs for term loans, composite term loans, or working capital facilities. The financial support framework is structured based on the loan amount:
– Loans ranging from Rs.15 lakhs to Rs.1 crore: 100% guarantee cover
– Loans from Rs.1 crore to Rs.2 crore: 80% guarantee cover
– Loans from Rs.2 crore to Rs.5 crore: 70% guarantee cover
– Loans above Rs.5 crore: 60% guarantee cover, up to a maximum of Rs.5 crore
Entities promoted by SC entrepreneurs can secure loans from banks or MLIs within this framework, with no collateral security requirements, offering a significant boost to access to credit.
Entities eligible to avail the guarantee cover include registered companies, societies, registered partnership firms, sole proprietorship firms, and individual SC entrepreneurs. For companies, societies, and firms, a minimum of 51% shareholding by SC entrepreneurs with management control and a minimum existence of 6 months are prerequisites.
The guarantee period extends to a maximum of 7 years or the repayment period, whichever is earlier. The initial guarantee is for 1 year and can be renewed annually. Banks or MLIs pay an annual renewal fee ranging from 0.20% to 0.75% depending on the loan amount. Additionally, SC women and SC divyang entrepreneurs benefit from reduced fees, ranging from 0.10% to 0.50%.