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Scheme Name : National Credit Guarantee Scheme (NCGS)
Country : Bhutan
Website :

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What is NCGS Scheme?

The National Credit Guarantee Scheme is a demonstration of the government’s will to kickstart economic revival in line with the four major trust areas- boost exports, substitute imports, encourage innovation and green technology and generating employment. Supporting Ideas into Reality. It is an intervention of the Government that should motivate the private sector to initiate economic activities that will stimulate the economy, create jobs and enhance productivity.

Related / Similar Facility : DAHE Students Loan Scheme for Tertiary Education Bhutan

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Why NCGS Scheme?

** Because we acknowledge that there are many business ideas that can diversify and make the economy more resilient.
** Because we cognize that fact that all business ideas do not have collateral support to access financing.
** Because we believe that the origin of the business idea will best be realized if implemented by that individual.

How will NCGS be Implemented?

** The government will provide Guarantees to the participating banks to enable lending.
** NCGS shall cover loans not exceeding Nu. 30 Million by way of term loans.
** Debt to Equity Ratio under the NCGS shall be 90:10, which is significantly lower than the existing 75:25.
** The Guarantee shall be limited to the debt financing of the project.

The National Credit Guarantee Scheme (NCGS) is a Bhutanese government initiative launc hed in October 2020 to stimulate investments and business growth. It’s a financial program specifically designed to address the challenges of accessing credit, particularly during the economic downturn caused by the COVID-19 pandemic.

How it Works?
The NCGS acts as a guarantee mechanism for loans availed by businesses. Under this scheme, the government shoulders a portion of the loan in case the borrower defaults. This significantly reduces the risk for banks and financial institutions, making them more inclined to lend to businesses, especially startups and small and medium enterprises (SMEs).

Bhutanese businesses of all sizes – cottage and small industries (CSIs), medium enterprises, and large enterprises – are qualified to apply for loans under the NCGS program.

The guarantee coverage offered varies depending on the business category:
** Cottage and Small Industries (CSIs) can avail of up to 100% debt financing without any collateral requirement, except for a mandatory 10% equity contribution.
** Medium and Large Enterprises are eligible for a government guarantee of up to 50% of the loan amount or a maximum of Nu. 30 million (whichever is lower). The remaining balance will be shared between the lender and the borrower.

Benefits of NCGS:
** Easier access to credit for businesses, especially startups and SMEs.
** Reduced risk for lenders, encouraging them to provide loans more readily.
** Stimulates business growth and investment.
** Contributes to Bhutan’s economic revival post-COVID-19.

FAQ On NCGS Scheme

Frequently Asked Questions FAQ On NCGS Scheme

What is guarantee period?
The guarantee period will not exceed a maximum of three years.

Who will be eligible for NCGS?
All aspiring Bhutanese desiring to start new projects or upgrade existing projects, under the category of Cottage and Small, Medium and Large industries.

What kind of businesses are eligible for the Scheme?
This Scheme is available to eligible businesses of large, medium and CSI, including primary producer, which falls under the category of the productive sector. The definition of productive sectors and full details of the eligibility criteria are available here.

What is National Credit Guarantee Support Facility (NCGSF)?
NCGSF is one-stop shop for NCGS related support and information.

How can businesses apply for the Scheme?
The NCGS is accessible by direct application to participating Banks. The Banks will start receiving applications from October 23, 2020.

Which Banks are participating in the Scheme?
The Bank of Bhutan, Bhutan Development Bank and National CSI Development Bank will participate in the NCGS from the launch.

What is the Debt to Equity Ratio to avail loans under NCGS?
The Debt to Equity Ratio under the NCGS will be 90:10, which is significantly lower than the existing 75:25. However, for start-ups under CSI category, equity requirement will be exempted.

What kind of support will the NCGSF provide?
In addition to facilitating the guarantee approval, the NCGSF will support project development guidance; facilitate clearances and approval for business establishment; and smooth implementation of the projects under the NCGS.

What is National Credit Guarantee Scheme (NCGS)?
The National Credit Guarantee Scheme (NCGS) is a counter cyclical policy measure during the COVID-19 situation to stimulate investments through enhanced access to finance. The Government will guarantee a portion of the loan under the scheme.

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