Loan Guarantee Scheme for Covid Affected Sectors (LGSCAS)

Operational Guidelines-Updated as on 17.08.2022

1. Name of the Scheme:

The Scheme shall be named as ‘Loan Guarantee Scheme for Covid Affected Sectors
(LGSCAS)’ (hereinafter referred as the ‘Scheme’)

2. Purpose of the Scheme:

To provide guarantee coverage for the funding provided by Scheduled Commercial Banks to
eligible projects in the healthcare sector for setting up of or modernising /expanding (i)
hospitals/dispensaries/clinics/medical colleges/pathology labs/diagnostic centres; (ii) facilities
for manufacturing of vaccines/oxygen/ventilators/priority medical devices; (iii) public
healthcare facilities.
The scheme shall provide guarantee cover to both brownfield projects and greenfield projects
in the above area of operations, subject to a maximum loan of Rs.100 crore per project. The
guarantee cover provided by NCGTC would be 50% (75% in case of projects coming up in
aspirational districts) in case of brownfield projects and 75% in case of greenfield projects.

3. Date of commencement
Scheme shall come into force from the date of issue of these guidelines by NCGTC and shall
cover all loans sanctioned on or after May 07, 2021.

4. Definitions
For the purposes of this Scheme –

 “Amount in Default” means the principal and interest amount outstanding in the
account of the borrower in respect of term loan/working capital facility (including
interest) as the case may be, as on the date of the account becoming NPA, or on the
date of lodgment of claim application, whichever is lower, or on such other date as may
be specified by Trustee Company for preferring any claim against the guarantee cover
subject to a maximum of amount guaranteed.
 “Credit facility” means financial assistance provided under the Scheme in the form
of fund based or non-fund based facility and is to be operated as a separate loan
account.
 “Eligible borrower” means existing units proposing to expand/diversify/set up eligible
projects or new units setting up eligible projects in areas other than the 8 metropolitan
cities. The 8 metropolitan cities are municipal areas of Ahmedabad, Bangalore,
Chennai, Kolkata, Mumbai, New Delhi, Pune & Hyderabad cities.
 “Aspirational Districts” means districts across the country identified by Niti
Aayog for transformation.
 “Member Lending Institution(s)” (MLI)
o Banks: All Scheduled Commercial Banks.
 “Non-Performing Assets” means an asset classified as non-performing based on the
instructions and guidelines issued by the Reserve Bank of India from time to time
 “Primary security” in respect of a credit facility shall mean the assets created out of
the credit facility so extended

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  “Interest Rate” for a lending institution means the rate so declared by that lending
institution from time to time as per Reserve Bank of India guidelines based on which
interest rate applicable for the loan will be determined.
 “Tenure of guarantee cover” means the maximum period of guarantee cover and
shall be as below :
“upto 2 years from the Date of Commencement of Commercial Operations (DCCO),
subject to maximum period of 5 years from the date of first disbursement, in case of
brownfield projects
“upto 5 years from the date of first disbursement, in case of greenfield projects”.

SCOPE AND EXTENT OF THE SCHEME

5. Eligible MLIs
 MLIs for this purpose shall include all Scheduled Commercial Banks (SCBs);

6. Duration
 The Scheme would be applicable to all eligible loans sanctioned during the period from
May 07, 2021 till March 31, 2023, or till guarantees for an amount of Rs.50,000 crore
are issued under the scheme, whichever is earlier.
 Last date of first disbursement shall be within 3 months of sanction of facility-however,
loans which were sanctioned prior to issuance of the revised guidelines shall be
allowed additional 3 months time from the date of issue of guidelines for first
disbursement.

7. Loan Amount eligible under the Guarantee Coverage

 The amount of funding in the projects covered under LGSCAS shall be decided by the
Banks based on their internal assessment. However, maximum loan per project shall
be limited to Rs.100 crore (both fund based and non-fund based included).
 MLIs would be required to open a separate account for Credit Facility extended under
the Scheme.

8. Interest Rate of Credit under the Scheme

Interest Rate on loans covered under LGSCAS would be charged as per the RBI guidelines
and shall be capped at 7.95 % p.a. till availability of the guarantee cover.
The Scheme may be operated in combination with applicable interest subvention scheme(s)
and/or the PPP-VGF scheme, as far as possible.

9. Nature of account and Tenor of Credit under the Scheme

 A separate loan account should be opened for the borrower, distinct from the existing
loan account(s), for coverage under the Scheme;
 Risk weight for loans provided under LGSCAS shall be as decided by RBI in due
course.

10. Security
 The lender shall create charge on the existing and proposed assets/securities, as
per its stipulation. NCGTC shall have second charge on the assets financed under
the Scheme (under both Greenfield and Brownfield projects), to be created within a
reasonable period of time from the date of disbursal, but in any case before the
account turning NPA. The MLI shall create charge in favour of itself and also on
behalf of NCGTC and take all necessary steps to protect the interests of NCGTC.

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11. Guarantee Fee
 No Guarantee Fee shall be charged from the MLIs by NCGTC for the Credit facilities
provided under the Scheme.

12. Extent of the Guarantee Coverage

 NCGTC shall provide the Guarantee coverage on the outstanding amount for the
credit facility provided to borrowers under the Scheme as on the date of NPA
(provided it occurs within the tenure of guarantee cover as per details below :
o Greenfield projects in any area & Brownfield projects in aspirational districts
– 75%
o Brownfield projects in areas other than aspirational districts - 50%

 Projects (Greenfield or Brownfield) in Metro cities shall not be eligible for coverage
under the scheme.

13. Definition of Default

 The definition of default for borrowers shall be as per the instructions and guidelines
issued by the Reserve Bank of India from time to time under extant norms on income
recognition, asset classification and provisioning.

14. Invocation of guarantee

 The Member Lending Institutions (MLIs) are required to inform the date on which the
account was classified as NPA within 90 days of the account being classified as
NPA;
 The MLI shall, while applying for interim claim, furnish certain details about the
account which would include, inter alia, date of NPA, amount of default, status of
legal action etc.
 Mere recall of notice shall not be construed as initiation of legal action. Legal action
shall be considered as initiated upon filing of application in Lok Adalat/Civil
Court/Revenue State Authority/DRT or after action pursuant to the notice issued
under Section 13(4) of SARFAESI Act, 2002 or after admission of application under
NCLT or such other action as may be decided by NCGTC from time to time.
 The Trustee Company shall pay 75 per cent of the guaranteed amount within 30
days of preferring of eligible interim claim by the lending institution, subject to the
claim being otherwise found in order and complete in all respects. The balance 25
per cent of the guaranteed amount will be paid on conclusion of recovery
proceedings or till the decree gets time barred, whichever is earlier. Any amount
recovered over and above the total dues, including legal costs, shall be remitted to
NCGTC by the MLI.

15. Appropriation of amount realized by the lending institution in respect of a credit

facility after the guarantee has been invoked and claim settled

Post invocation/settlement of the guarantee claim, if any recoveries are made in the account,
MLIs shall first adjust such recoveries against legal costs incurred by them for recovery of
the amount and its dues and shall thereafter remit to NCGTC the balance recoveries.

16. Agreement to be executed by the lending institution

 A lending institution shall not be entitled to a guarantee in respect of any eligible

credit facility granted by it unless it has submitted an Undertaking with the Trustee
Company in such form as may be required by the Trustee Company for covering by
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 way of guarantee, under the Scheme all the eligible credit facilities granted by the
lending institution, for which provision has been made in the Scheme.
 All interested and eligible MLIs are required to submit the Undertaking to NCGTC for
the purpose of this Scheme.

17. Responsibilities of lending institution under the Scheme

 MLIs shall provide requisite data / information to NCGTC or DFS or its constituents,
as it may require from time to time.
 MLIs shall enable communication of the Scheme by highlighting the Scheme details
on their website and linking to Scheme webpage.
 MLIs shall draw realistic repayment schedule and closely monitor the implementation
of the project.
 MLIs shall ensure to stipulate a condition for the borrower to comply with applicable
health quality regulations prescribed by relevant standards/agencies at the time of
project appraisal and ensure to obtain proper certification in this regard at the time of
disbursement of loan and implementation of the project.
 MLIs shall closely monitor the borrower accounts and shall put in all required efforts to
ensure that the account is serviced regularly.
 MLIs shall safeguard the securities in respect of the credit facility in good and
enforceable condition.
 MLIs shall ensure that the guarantee claim in respect of the credit facility and borrower
is lodged with the Trustee Company in the form and in the manner and within such
time as may be specified by the Trustee Company in this behalf and that there are no
delays on its part to notify the default in the borrowers account which shall result in the
Trustee Company facing higher guarantee claims.
 The payment of guarantee claim by the Trustee Company to the lending institution
does not in any way take away the responsibility of the MLI to recover the entire
outstanding amount of the credit from the borrower. The MLI shall exercise all the
necessary precautions and maintain its recourse to the borrower for entire amount of
credit facility owed by it and initiate all necessary actions for recovery of the
outstanding amount, including such action as may be advised by the Trustee
Company.
 The MLIs shall comply with such directions as may be issued by the Trustee Company
from time to time for facilitating recoveries in the guaranteed account, or safeguarding
its interest as a guarantor, as the Trustee Company may deem fit and the MLI shall be
bound to comply with such directions.
 The MLI shall, in respect of any guaranteed account, exercise the same diligence in
recovering the dues, and safeguarding the interest of the Trustee Company in all the
ways open to it as it might have exercised in the normal course if no guarantee had
been furnished by the Trustee Company. The MLI shall, in particular, refrain from any
act of omission or commission, either before or subsequent to invocation of guarantee,
which may adversely affect the interest of the Trustee Company as the guarantor. In
particular, the MLI should intimate the Trustee Company while entering into any
compromise or arrangement, which may have the effect of discharge or waiver of
personal guarantee(s) or security.
 The MLI shall also ensure either through a stipulation in an agreement with the
borrower or otherwise, that it shall not create any charge on the security held in the
account covered by the guarantee for the benefit of any account not covered by the
guarantee, with itself or in favour of any other creditor(s) to the detriment of the Trustee

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 Company. Further the MLI shall secure for the Trustee Company or its appointed
agency, through a stipulation in an agreement with the borrower or otherwise, the right
to list the defaulted borrowers’ names and particulars on the Website of the Trustee
Company.

18. Modifications in the Scheme

Any changes to the structure of the Scheme, including but not limited to the eligibility
criteria, guarantee fee, rate of interest and tenor of loans under the Scheme, shall be decided
by the Management Committee for the LGSCAS Fund.

19. The scheme guidelines may be read along with the FAQs uploaded on the website from
time to time.

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