Credit Guarantee Scheme for MFIs (CGSMFI)

Credit Guarantee Scheme for MFIs (CGSMFI)

 

Government of India has come up with a scheme to provide funding to  NBFC-MFIs/MFIs to enable them to extend need based financial assistance to their existing small borrowers.

Under the scheme, NCGTC would be providing guarantee coverage to eligible lending institutions for the funding provided by them to NBFC-MFIs or MFIs for onward lending to eligible small borrowers affected by Covid-19 pandemic. 

Name of the Facility

Credit Guarantee Scheme for MFIs (CGSMFI)

Scheme Validity Upto March 31, 2022 or till guarantees for an amount of Rs.7,500 Crores is issued under CGSMFI, whichever is earlier.
Purpose  To provide funding to NBFC-MFIs or MFIs for onward lending to eligible small borrowers affected by Covid-19 pandemic.
Eligibility All NBFC-MFIs/MFIs who are registered with one of the Self-Regulatory Organisations recognized by RBI (presently MFIN & Sa-Dhan).
Eligible Limit  Need based and as per bank’s internal assessment.
Interest Rate Interest Rate capped at 1 Year MCLR + 2% p.a    
Guarantee coverage The funding so provided by the bank shall be guaranteed by NCGTC to the extent of 75% of amount in default for a maximum period of 3 years  .
Processing fee/ Pre-payment penalty As per Bank’s norms.
Guarantee Fee payable to credit guarantee trust Nil
Compliances to be followed by NBFC-MFIs/MFIs

The funding  provided by the Bank to the MFIs/NBFC-MFIs shall be utilized for onward lending to eligible small borrowers.  MFIs/NBFC-MFIs should ensure that:

  • 80% of the assistance so extended is utilized for creation of fresh loan assets. These assets should be created within a period of 4 months from the date of disbursement of each tranche of loans. The same shall be ensured by obtaining bureau report of the incremental lending covered under the scheme on a quarterly basis for compliance of this.
  • Interest rate charged on these loans is minimum 2% below the maximum rate prescribed by RBI on such loans. 
  • MFIs/NBFC-MFIs submits Statutory Auditor certificate to the Bank confirming compliance of the above within 4 months from the date of disbursement of each tranche of loan by the Bank.
NCGTC Guidelines Please visit NCGTC Website

 

For further details on the GECL product, please contact your Branch.