New Delhi, July 26 (KNN) The government is in the process of formulating a Credit Guarantee Scheme for Startups (CGSS) with Rs 2000 crores as the initial corpus for the scheme, Union Minister for Commerce and Industry, Nirmala Sitharaman informed Rajya Sabha.

Under the scheme the entrepreneurs can apply for loan without any collateral for starting their own business units.

The Scheme will provide credit guarantee up to 500 lakhs per business inclusive of term loan, working capital or any other instrument of assistance extended by Member Lending Institutions (MLIs) to finance Startup recognized by Department of Industrial Policy and Promotion (DIPP).

The Minister also informed about the certain norms and preconditions of the scheme.  Under the scheme, assistance shall be provided under certain portfolios, Each portfolio shall comprise of at least 10 eligible startup in a financial year.

Also instruments of assistance could be In the form of venture debt, working capital debentures, optionally convertible debt etc.

Member Lending Institutions may provide loans to up to any amount required by a startup. However, under the scheme the exposure for availing credit guarantee shall be limited to Rs.500 lakh per startup. Such loan will be extended by MLIs without any collateral security and/or third party guarantee.

The Minister further informed that a Risk Evaluation Committee will be set up to take stock of cases in issues relating to conflict of interest. (With PIB Inputs) (KNN/ DA)