Page 297 - Low Carbon Development in China and India
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apply for this insurance, whatever the size of his holding, at an interest
rate ranging from 1.5 per cent to 3.5 per cent, depending on what he grows.
The insurance can be either area-based or individual-based (viz., for
widespread or localized calamities) (Raju & Chand, 2008). In the case
of an area-based insurance, an average yield of this particular area
is defined (based on previous years’ data) and if the actual yield is
below the historical level, the insured farmers in this unit can ask for
indemnification (70, 80, or 90 per cent, respectively, for high, medium,
and low risk areas).
In total, some 25 million farmers have been insured, thanks to the
NAIS, which makes it the largest crop insurance programme in the
world. However, India has around 121 million farmers, out of which
80 per cent do not receive any help from financial institutions but rely
on themselves to meet their financial needs—a lot of efforts remain to
be made to meet the demand.
The Ministry of Micro, Small and Medium Enterprises, Government
of India, and Small Industries Development Bank of India (SIDBI),
established a Trust named Credit Guarantee Fund Trust for Micro
and Small Enterprises (CGTMSE) to implement the Credit Guarantee
Fund Scheme for Micro and Small Enterprises. The scheme was
formally launched on August 30, 2000. The corpus of CGTMSE is being
contributed by the GoI and SIDBI in the ratio of 4:1, respectively, and
INR 2,295.30 crore (approx. USD 382.55 million) had been contributed
to the corpus of the Trust up to August 31, 2014. According to
CGTMSE, this scheme reassures the lender that in case a MSE unit fails
to discharge its liabilities to the lender, the Guarantee Trust would
cover for the loss incurred by the lender up to 75/80/85 per cent of the
credit facility. SIDBI has been able to cover over 14 lakh units under
that scheme for MSMEs for loans of about INR 70,000 crore (approx.
USD 11.66 billion).8
A risk sharing mechanism that has been introduced under the
National Mission on Enhanced Energy Efficiency (NMEEE) of
the National Mission on Climate Change (NAPCC) is Partial Risk
Guarantee Fund (PRGF). It provides commercial banks with partial
coverage of risk exposure against loans issued for energy efficiency
projects by substituting a portion of the risk of the borrower by
providing guarantees.
On March 31, 2015, the World Bank and the Government of
India have signed a USD 43 million grant and guarantee agreement
8 http://www.thehindu.com/news/cities/Coimbatore/sidbi-supports-msmes-
through-collateralfree-loans/article6092332.ece
262 Low Carbon Development in China and India
rate ranging from 1.5 per cent to 3.5 per cent, depending on what he grows.
The insurance can be either area-based or individual-based (viz., for
widespread or localized calamities) (Raju & Chand, 2008). In the case
of an area-based insurance, an average yield of this particular area
is defined (based on previous years’ data) and if the actual yield is
below the historical level, the insured farmers in this unit can ask for
indemnification (70, 80, or 90 per cent, respectively, for high, medium,
and low risk areas).
In total, some 25 million farmers have been insured, thanks to the
NAIS, which makes it the largest crop insurance programme in the
world. However, India has around 121 million farmers, out of which
80 per cent do not receive any help from financial institutions but rely
on themselves to meet their financial needs—a lot of efforts remain to
be made to meet the demand.
The Ministry of Micro, Small and Medium Enterprises, Government
of India, and Small Industries Development Bank of India (SIDBI),
established a Trust named Credit Guarantee Fund Trust for Micro
and Small Enterprises (CGTMSE) to implement the Credit Guarantee
Fund Scheme for Micro and Small Enterprises. The scheme was
formally launched on August 30, 2000. The corpus of CGTMSE is being
contributed by the GoI and SIDBI in the ratio of 4:1, respectively, and
INR 2,295.30 crore (approx. USD 382.55 million) had been contributed
to the corpus of the Trust up to August 31, 2014. According to
CGTMSE, this scheme reassures the lender that in case a MSE unit fails
to discharge its liabilities to the lender, the Guarantee Trust would
cover for the loss incurred by the lender up to 75/80/85 per cent of the
credit facility. SIDBI has been able to cover over 14 lakh units under
that scheme for MSMEs for loans of about INR 70,000 crore (approx.
USD 11.66 billion).8
A risk sharing mechanism that has been introduced under the
National Mission on Enhanced Energy Efficiency (NMEEE) of
the National Mission on Climate Change (NAPCC) is Partial Risk
Guarantee Fund (PRGF). It provides commercial banks with partial
coverage of risk exposure against loans issued for energy efficiency
projects by substituting a portion of the risk of the borrower by
providing guarantees.
On March 31, 2015, the World Bank and the Government of
India have signed a USD 43 million grant and guarantee agreement
8 http://www.thehindu.com/news/cities/Coimbatore/sidbi-supports-msmes-
through-collateralfree-loans/article6092332.ece
262 Low Carbon Development in China and India
