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Credit Risk Guarantee Fund Scheme for low income housing  ( CRGFSLIH )

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Rajesh Goyal 




What is Credit Risk Guarantee Fund Scheme / Background for CRGFT :


In March 2012, Union Cabinet approved the establishment of the Credit Risk Guarantee Fund Trust (CRGFT) for Low Income Housing. The CRGFT will have an initial corpus of Rs.1200 crore of which Rs.1000 crore is being contributed from the Centre and the remaining Rs.200 core will come from the State Governments who draw on it, in accordance with their slum populations. This was launched is in pursuance of the approval of the Rajiv Awas Yojana (RAY) Scheme by the Cabinet Committee on Economic Affairs (CCEA) in June 2011 which included the creation of a Risk Guarantee Fund for low income housing loans. 


The CRGFT is to administer and operate the Credit Risk Guarantee Fund Scheme (CRGF Scheme).  The key principle of the CRFG Scheme is that the lender shall secure the housing construction/ upgradation loan purely on the assets financed, without any other collateral.

The Trust is to  guarantee the housing loans made by the lending institutions like Commercial Banks, Regional-Rural Banks. Housing Finance Companies, Cooperative Housing Finance Societies etc. to new or existing individual EWS/LIG borrowers and eligible borrowers forming a group or housing society of at least 20 members for purposes of home improvement, construction, acquisition, and purchase of new or second hand dwelling units of size up to 430 sq.ft. (40 sq.mtrs.) carpet area involving an amount not exceeding Rs.5 lakh per loan without any collateral security and / or third party guarantees.


The Credit Risk Guarantee Fund Trust set up under the Indian trust Act, 1882 and the Ministry of Housing & Urban Poverty Alleviation (HUPA) will be the settler of the Trust. The Trust shall be managed and administered by a Board of Trustees with cross sectoral composition. The Trust shall be serviced by the National Housing Bank (NHB).



What is Credit Risk Guarantee Fund Scheme for low income housing  ( CRGFSLIH ) ?


The scheme has been launched in November 2012, wherein  three major lending agencies State Bank of India, Central bank of India and HDFC entered into agreement with the Credit Guarantee Trust. 


(a) Under the CRGFSLIH scheme, the borrowers from EWS/LIG categories could take up housing loans upto Rs 5 lakh without requiring any collateral security or third party guarantee.


(b) The extent of guarantee cover provided under the scheme would be 90 per cent of amount in default in respect of loan amount upto Rs 2 lakh and 85 per cent of the amount in default for housing loan above Rs 2 lakh to 5 lakh.


(c) The scheme aims at facilitating flow of credit to the low income households in the EWS/LIG category from the formal financial sector,



Last updated : November 2012 : (More details will be uploaded as the Scheme becomes operational )


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