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Credit Guarantee Enhancement Corporation to Set Up in 2019-20

Published on July 19, 2019
Current context: The government is to set up the Credit Guarantee Enhancement Corporation (CGEC) with Rs 20K crore capital
Credit Guarantee Enhancement Corporation to Set Up in 2019-20
  • The Infrastructure finance entity- CGEC was announced by Nirmala Sitharaman in the budget 2019-20 to increase the source of capital for infrastructure financing
  • The CGEC is expected to free up lending of up to Rs 3.5 lakh crore by the banks
  • It will be set up with a capital of Rs 20K crore
  • The step was taken to fulfil the need for investment as it is estimated that India requires an average investment of 20 lakh crore every year
  • The Finance Minister proposed to set up the CGEC in 2019-20 and the regulations have been notified by the RBI
  • Credit enhancement helps the companies to improve their bond ratings by ensuring guaranteed bond payment to a certain limit
  • It helps the issuer of the bond to get access to markets at cheaper rates than the bank’s borrowings


Q.1 Which infrastructure finance entity was proposed to be set up in Budget 2019-20?
a. Credit Guarantee Bond Corporation
b. Credit Guarantee Enhancement Corporation
c. Credit Bond Enhancement Corporation
d. Credit Bond Rating Corporation
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