Cabinet approves creation of a Credit Guarantee Fund for MUDRA loans
The fund is expected to guarantee more than Rs 1,00,000 crore worth of loans to micro and small units in the first instance.
The salient features of the scheme are as follows:
(i) Establishment of Credit Guarantee Fund for MUDRA Units(CGFMU) for guaranteeing loans sanctioned under Pradhan Mantri Mudra Yojana with effect from 8th April, 2015 with the objective to reduce the credit risk to Banks / NBFCs / MFIs / other financial intermediaries, who are Member Lending Institutions (MLIs).
(ii) The National Credit Guarantee Trustee Company Ltd. (NCGTC Ltd.), a wholly-owned company of Government of India, constituted under the Companies Act, 1956 (2013) to manage and operate various credit guarantee funds, shall be the Trustee of the Fund.
(iii) The guarantee would be provided on portfolio basis to a maximum extent of 50% of Amount in Default in the portfolio.
The MUDRA (SIDBI) Bank will undertake refinance operations and provide support services with focus on portal management; data analysis etc. apart from any other activity entrusted/ advised by Government of India.
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