Which of the following is a key feature of the Stand-Up India scheme?
Show answer & explanation
Correct answer: A
Explanation
Correct Answer: Collateral-free loans
Explanation
A defining feature of the Stand-Up India scheme is its focus on easing credit access for traditionally underserved communities. To remove the barrier of high-value asset guarantees, the scheme facilitates collateral-free loans. It achieves this by utilizing the Credit Guarantee Scheme for Stand-Up India (CGSSI), where the government provides a credit guarantee wrap, giving banks the confidence to extend large loans without demanding physical security or property collateral from the borrowers.
The scheme specifically targets Scheduled Caste (SC), Scheduled Tribe (ST), and women entrepreneurs by mandating bank branches to extend credit between ₹10 Lakh and ₹1 Crore. It focuses on setting up brand new ventures, known as greenfield projects. The other options are incorrect because the loan is designated generically for setting up a greenfield enterprise in manufacturing, services, agri-allied, or trading sectors, rather than being exclusive to green energy, real estate development, or export-only business frameworks.
Key Points
Loans can be secured alternatively through a guarantee cover from the National Credit Guarantee Trustee Company (NCGTC) or via actual collateral, completely at the option and flexibility of the lending bank.
The target demographic requires that at least one SC or ST borrower and at least one woman borrower receive a loan per scheduled commercial bank branch.
In the case of non-individual enterprises, a minimum of 51% of the shareholding and controlling stake must be held by an SC, ST, or woman entrepreneur to qualify for the scheme.
Important Questions and Answers
Question: Which corporate body manages the credit guarantee fund that allows Stand-Up India loans to be processed without rigid personal collateral?
Answer: The National Credit Guarantee Trustee Company (NCGTC) manages the operational credit guarantee fund.
Question: What is the maximum tenure, including the maximum allowed moratorium period, given to a borrower to repay a Stand-Up India loan?
Answer: The loan is repayable within 7 years, with a maximum permissible moratorium period of 18 months.