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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

Question: 

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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