National Credit Guarantee Trustee Company Ltd (NCGTC)

National Credit Guarantee Trustee Company

National Credit Guarantee Trustee Company Ltd (NCGTC) is a private limited company incorporated under the Companies Act 1956 on March 28, 2014, established by the Department of Financial Services, Ministry of Finance. It is a wholly owned company of the Government of India to act as a common trustee company for multiple credit guarantee funds. It was established with a paid-up capital of ₹10 crore, with its registered office at Mumbai. The Tagline of NCGTC is Saath Udaan Bharein

What are Credit guarantee programmes?

Credit guarantee programmes are designed to share the lending risk of the lenders and in turn, facilitate access to finance for the prospective borrowers. The intent of NCGTC is therefore, to manage multiple guarantee schemes as part of a larger financial inclusion programme of the government covering different cross-sections and segments of the economy like students, micro entrepreneurs, women entrepreneurs, SMEs, skill and vocational training needs, etc.

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Credit Guarantee Trusts managed by NCGTC

There are five dedicated credit guarantee Trusts under the Management of NCGTC

  1. Credit Guarantee Fund Scheme for Educational Loans (CGFEL)
  2. Credit Guarantee Fund Scheme for Skill Development (CGFSD)
  3. Credit Guarantee Fund Scheme for Factoring (CGFF)
  4. Credit Guarantee Fund for Micro Units (CGFMU)
  5. Credit Guarantee Fund for Stand Up India (CGFSI).

Cumulatively, these five Trusts have a committed credit guarantee corpus of Rs 13,000 crore.

Chairman of NCGTC

The chairman of NCGTC is MOHAMMAD MUSTAFA, IAS Chairman & Managing Director, SIDBI

Guaranteed Emergency Credit Line of Rs. 3 lakh crore

The GECL is a loan for which 100% guarantee would be provided by National Credit Guarantee Trustee Company (NCGTC) to Member Lending Institutions (MLIs), and which will be extended in the form of additional working capital term loan facility in case of Scheduled Commercial Banks (SCBs) and Financial Institutions (FIs), and additional term loan facility in case of Non-Banking Financial Companies (NBFCs), to eligible MSMEs/ Business Enterprises and interested Pradhan Mantri Mudra Yojana (PMMY) borrowers

  • Credit under GECL would be up to 20% of the borrower’s total outstanding credit up to Rs. 25 crore, excluding off-balance sheet and non-fund based exposures , as on 29th February, 2020, i.e., additional credit shall be up to Rs. 5 crore.
  • It seeks to provide much needed relief to the MSME sector by incentivizing MLIs to provide additional credit of up to Rs. 3 lakh crore at low cost, thereby enabling MSMEs to meet their operational liabilities and restart their businesses as a specific response to the unprecedented situation COVID-19
  • The Emergency Credit Line Guarantee Scheme provides 100% guarantee coverage by NCGTC
  • MSMEs for the purpose of this Scheme will include MSMEs/ Business Enterprises which are constituted as Proprietorships, Partnerships, Registered Companies, Trusts and Limited Liability Partnerships (LLPs), and also interested borrowers under PMMY.
  • The Scheme would be applicable to all loans sanctioned under GECL during the period from May 23, 2020 to 31st October, 2020, or till an amount of Rs. 3 lakh crore is sanctioned under GECL, whichever is earlier
  • Borrower accounts should be classified as regular, SMA-0 or SMA-1 as on 29.2.2020. Accounts classified as NPA or SMA-2 as on 29.2.2020 will not be eligible under the Scheme
  • The MSME borrower must be GST registered in all cases where such registration is mandatory. This condition will not apply to MSMEs that are not required to obtain GST registration.
  • For Banks and FIs, one of the RBI prescribed external benchmark linked rates +1% subject to a maximum of 9.25% per annum. For NBFCs, the interest rate on GECL shall not exceed 14% per annum
  • The tenor of loans provided under GECL shall be four years from the date of disbursement. No pre-payment penalty shall, however, be charged by the MLIs in case of early repayment.
  • A moratorium period of one year on the principal amount shall be provided for GECL funding. Interest shall, however, be payable during the moratorium period. The principal shall be repaid in 36 instalments after the moratorium period is over.
  • NCGTC will not charge any guarantee fee under the Scheme
  • No additional processing fee shall be charged by lenders

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Tags: Functions of NCGTC