New Delhi: With the aim of promoting businesses in the National Capital, loans of up to Rs 10 crore will now be available without any collateral. The Rekha Gupta-led Delhi government has signed an agreement with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). Experts are of the opinion that this move will ease the capital-related problems of small business owners. Small entrepreneurs will no longer have to provide any kind of guarantee or property documents to obtain loans from banks.
On Tuesday, the Memorandum of Understanding (MoU) was signed at an event held at the Delhi Secretariat in the presence of Chief Minister Rekha Gupta. Talking about this development, CM Gupta said that a large number of young people in Delhi want to start their own startups, but earlier they could not get financial support at the initial stage. This problem will now be resolved.
As businesses grow, new employment opportunities will also be created.
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Here are some of the key details:
- Under the Delhi Credit Guarantee Scheme, when an entrepreneur takes a loan from a bank, 75 to 90 percent of the loan amount will be guaranteed by CGTMSE
- 5 to 20 percent of the loan will be guaranteed by the Delhi government.
- A total of 95 percent of the bank loan will be backed by the government guarantee, reducing the banks’ risk to just 5 percent.
- The scheme covers businesses from various sectors, including manufacturing, services, retail, education, and training institutes.
- The government has created a special fund of Rs 50 crore for this purpose, enabling banks to disburse loans of up to Rs 2,500 crore.
Scheme aims to provide loans to one lakh people initially
It is important to note that the fund amount will be increased as required. Under the scheme, an investment of Rs 2 crore can facilitate loans of up to Rs 100 crore. A 10 percent Non-Performing Asset (NPA) limit has been set to keep the government’s financial risk under control. Initially, the target is to provide benefits to one lakh people, though there is no cap or upper limit on the number of beneficiaries.
Any small business owner in Delhi who meets the scheme’s conditions will be provided a loan backed by the Delhi Government’s guarantee. Special assistance will be given to women entrepreneurs.
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