Mutual Credit Guarantee Scheme

Mutual Credit Guarantee Scheme

The Government of India has approved the introduction of the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME), offering 60% guarantee coverage through the National Credit Guarantee Trustee Company Limited (NCGTC). This scheme aims to enhance credit access by providing guarantees to Member Lending Institutions (MLIs) like banks and NBFCs.

Key Features of MCGS-MSME:

• Eligible Borrowers: MSMEs with a valid Udyam Registration Number.
• Loan Coverage: Up to ₹100 crore per MSME for purchasing plant, machinery, or equipment. The project cost can exceed ₹100 crore, but 75% must be for machinery/equipment.
• Repayment Terms:
  • Loans up to ₹50 crore: 8-year repayment (with a 2-year moratorium on principal).
  • Loans above ₹50 crore: Customizable repayment and moratorium terms.
• Scheme Duration: 4 years or until a cumulative guarantee of ₹7 lakh crore is issued.

• The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) offers collateral-free loans.
• The Raising and Accelerating MSME Performance (RAMP) program allocates ₹6,000 crore over 5 years to boost MSME growth.
• Priority Sector Lending (PSL) norms ensure bank loans to MSMEs are classified under priority sector lending.

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