GoI notifies the expansion of CGSS to increase capital mobilization for startups

Current Context: The Government of India (GoI) has expanded the Credit Guarantee Scheme for Startups (CGSS) to enhance capital mobilization for early-stage ventures.

The Department for Promotion of Industry and Internal Trade (DPIIT) announced the expansion on May 9, 2025, aligning with the Union Budget 2025-26 proposals.

Key Updates in CGSS Expansion:

Increased Guarantee Cover: Raised from ₹10 crore to ₹20 crore per borrower.
Higher Risk Coverage: 85% guarantee for loans up to ₹10 crore, 75% for loans above ₹10 crore.
Lower Annual Guarantee Fee (AGF): Reduced from 2% to 1% for startups in 27 Champion Sectors under Make in India.
Collateral-Free Debt Funding: Supports working capital, term loans, and venture debt through banks, NBFCs, and AIFs.

The expansion aims to reduce lending risks, encourage innovation, and strengthen India’s startup ecosystem.

Question:

Q.1 What is the new maximum guarantee cover per borrower under the expanded Credit Guarantee Scheme for Startups (CGSS)?
a) ₹5 crore
b) ₹10 crore
c) ₹15 crore
d) ₹20 crore

Answer: d) As per the recent announcement, the maximum guarantee cover under CGSS has been increased from ₹10 crore to ₹20 crore to support early-stage startups with higher capital requirements.