Credit Enhancement Guarantee Scheme For The Scheduled Castes
Updated: 28-01-2025 at 7:08 AM
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The Credit Enhancement Guarantee Scheme for Scheduled Castes is one of the main schemes by the Government of India, through IFCI Ltd, under the aegis of the Ministry of Social Justice and Empowerment. The government scheme seeks to promote entrepreneurship among the Scheduled Caste (SC) persons through the offering of credit enhancement for loans. This Sarkari scheme involves funding for term loans, working capital and composite loans to RO SC entrepreneurs to promote financial inclusion and financial strength of the SC communities. The employment of SC communities in active business involvement through business ownership opportunities is the goal of this govt loan scheme.
| Feature | Details |
|---|---|
| Conducting Body | IFCI Ltd under the Ministry of Social Justice |
| Target Group | SC Entrepreneurs |
| Guarantee Amount | ₹0.15 crore to ₹5 crore |
| Loan Type | Term Loans, Working Capital |
| Lock-In Period | 12 months |
| Maximum Loan Tenure | 7 years |
| Sectors Covered | Primary, Manufacturing, Service Sectors |
| Eligibility | SC-owned companies, partnership firms, societies |
| Application Mode | Online |
What Is The Credit Enhancement Guarantee Scheme For Scheduled Castes?
The Ministry of Social Justice and Empowerment created this initiative to help members of the Scheduled Caste (SC) community start their businesses. The program provides support and resources to encourage financial independence, enabling SC individuals to successfully launch and sustain their ventures. Such loan guarantees enhance SC entrepreneurs’ borrowing power against loans offered by banks and financial institutions also referred to as Member Lending Institutions (MLIs). It covers SC-owned business enterprises in all areas of operation, be it, manufacturing, service, primary sectors and others for acquisition of funds to expand their operations and build up their assets.
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CEGSSC Features
The Scheduled Caste Credit Enhancement Guarantee Scheme has helpful aspects that aim at increasing access to finances and creating entrepreneurship ventures in the SC community. These features aim at providing financial aid and lowering risks for both the entrepreneurs and the lending institutions. Among the key features are the following:
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Guaranteed Loan Coverage: The govt scheme guarantees a loan of up to 5 crores which reduces financial risk for banks as well as institutions.
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Sectors Covered: SC entrepreneurs in the primary, manufacturing and service sectors are covered by this scheme.
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Lock-In Period: The guarantee includes a lock-in period of 12 months after the full loan is disbursed, ensuring that claims cannot be made too early in the loan term.
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Loan Types: The guarantee shall cover working capital loans, term loans and combined loans offered by MLIs.
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IFCI as the Guarantee Agency: IFCI, acting as the nodal agency, manages the guarantee cover and manages the agreement duties on guarantee fees.
CEGSSC Objective
The Credit Enhancement Guarantee Scheme has been instituted specifically to aid Scheduled Caste (SC) communities by providing financial assistance and promoting entrepreneurship. The primary objectives of this scheme are as follows:
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Support SC entrepreneurs: Help SC entrepreneurs to start up and expand businesses thus helping financial strength at the household level in SC communities.
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Provide Access to Loans: Enhance access to credit for SC individuals through supporting small loan providers.
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Create direct/indirect job opportunities: Enhance the establishment of SC businesses to generate SC employment opportunities.
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Economic Growth of SC: The Sarkari Yojana also contributes to the economic development of the Scheduled Caste communities.
Read More: House Construction Subsidies For The Scheduled Castes
CEGSSC Benefits
| Benefit | Details |
|---|---|
| Loan Guarantee Amount | Minimum of ₹0.15 crore and a maximum of ₹5 crore per loan |
| Repeat Credit | SC entrepreneurs can avail of credit enhancement for future loans |
| Lock-In Period | 12 months after last loan disbursement |
| Longest Loan Period | 7 years or until the loan repayment, whichever is earlier |
Sectors Covered
The Credit Enhancement Guarantee Scheme provides wide help for SC entrepreneurs in numerous spheres and encourages growth. The supported sectors include:
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Primary Sector: Agriculture, fishery and related activities.
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Manufacturing Sector: Industries and manufacturing activities.
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Service Sector: Business activities of establishments that offer services in various sectors.
Types Of Borrowers
The Credit Enhancement Guarantee Scheme provides credit and guarantees to a diverse group of eligible borrowers, particularly supporting Scheduled Caste entrepreneurs. Eligible borrowers include:
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Registered Companies: Firms with over fifty-one per cent SC ownership.
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Partnership Firms: Registered companies with more than fifty-one per cent Schedule Caste Person ownership.
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Societies: Societies registered under the Societies Act with SC management control.
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Sole Proprietorship: Scheduled Caste persons operating single-owner business businesses.
Read More: Caste Certificate
Lock-In Period
The scheme includes a lock-in period of 12 months, which means borrowers cannot make claims on the guarantee if the loan goes bad within the first year. This ensures that the loan has time to stabilise and function as intended, supporting the business through its initial challenges. For example, suppose a business faces difficulties soon after taking the loan. In that case, the borrower is encouraged to use available resources and strategies to manage and stabilise operations rather than claiming early on the guarantee.
Loan
The term "loan" under this government scheme refers to any working capital loan, term loan, or composite term loan granted to SC enterprises by MLIs.
Guarantee Fee & IFCI’s Obligation
Under the Credit Enhancement Guarantee Scheme, the guarantee fee structure and the responsibilities of IFCI are highly significant for the effective administration of the scheme. These are provided below:
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Guarantee Fee: In addition to the one-off charge of 1.5%, an annual fee of 0.50% for maintenance is also charged.
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Obligations of IFCI: FCI is responsible for managing the guarantee, ensuring that it covers eligible loans up to specified limits for the lending institutions (MLIs).
CEGSSC Eligibility Criteria
The Credit Enhancement Guarantee Scheme has incorporated special conditions to favour entrepreneurs who are of the Scheduled Caste and their businesses. For the scheme to be eligible, applicants must meet the criteria below:
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The enterprise should be owned and managed by Scheduled Caste promoters who are more than 51 per cent owners.
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The company should have been with this SC promoter for over six months.
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The enterprise should be in the primary, service or manufacturing sectors.
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Startups promoted by SC entrepreneurs qualify for the scheme.
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The SC promoters are not permitted to reduce their shareholding below fifty-one per cent during the term of the loan.
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CEGSSC Application Process
The Credit Enhancement Guarantee Scheme has a simple, uncomplicated and user-friendly online application process to make SC entrepreneurs’ financial needs and assistance at ease. The process involves the following steps:
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Online Application: Visit the official portal and fill in details related to the enterprise and the borrower.
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Loan and Bank Details: Correct loan and bank details must be provided.
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Document Upload: Add all documents that are required.
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Submission: After filling in the application, send it in for online submission for additional processing.
CEGSSC Required Documents
All applicants must submit accurate documents as a pre-requisite for successfully applying for the Credit Enhancement Guarantee Scheme. The necessary documents are:
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Loan sanction letter or loan approval letter from the lending institution.
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Business registration documents.
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Details of ownership and ownership details.
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Conclusion
The Credit Enhancement Guarantee Scheme For Scheduled Castes is a financially helpful initiative for SC entrepreneurs by providing them with the necessary support for the growth of their businesses. This government scheme enhances entrepreneurship through the provision of guarantees on loans together with the improvement of building value and sustainably promotes development within SC communities.
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