Credit Guarantee Fund Scheme was proposed by Ministry of Housing & Urban Poverty Allevation

To address the issue of credit enablement of EWS and LIG households, the Ministry of Housing & Urban Poverty Alleviation (HUPA) proposes to create a Credit Risk Guarantee Fund Scheme (CGFS) under Rajiv Awas Yojana (RAY).

The Proposed fund has the following features:

1. Under the Credit Guarantee Fund Scheme (CGFS) the Government of India will provide credit guarantee support to collateral-free / third-party-guarantee-free housing loans up to Rs. 5 lakh extended by lending institutions for Low Income Housing.
2. The CGFS will cover the housing loans to EWS/ LIG borrowers for the purposes of repairs, home improvement, construction, acquisition, and purchase of new or second hand dwelling units, involving an amount not exceeding Rs. 5 lakh per loan.
3. The guarantee cover available under the scheme is proposed to be to the extent of 90% of the sanctioned housing loan amount for a loan amount of upto Rs.2 lakh. And 85% for loan amounts above Rs.2 lakh and upto Rs. 5 lakh.
4. To administer and oversee the operations of the Scheme, provision has been made for establishment of a Credit Risk Guarantee Fund Trust for low income housing (CGFT).
5. Rs.1000 crores has been earmarked as an initial Corpus for CGFS.