Expansion of credit is necessary for investments. However, collateral requirement is a major impediment, in particular, for aspiring entrepreneurs to avail financing. Therefore, the NCGS will alleviate this challenge of aspiring entrepreneurs, especially under the Cottage and Small Industry.
All loans under the Cottage and Small category will not require collateral and startups under the CSI category will be eligible for 100 percent debt financing under the NCGS.
Unlike practices across the globe, the medium and large categories will also be eligible for loans under the NCGS. However, under such categories, a portion of guarantee will be shared between the Government and the Bank and the balance will be secured with collateral from the borrower. Therefore, the NCGS has been designed to include all categories of industries, but in a responsive
and equitable manner.