New scheme offers 60 percent guarantee coverage on loans up to ₹100 crore for MSMEs, promoting investment in machinery and equipment.
The government has approved the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME), fulfilling the 2024-25 budget announcement. The initiative aims to strengthen the manufacturing sector by providing financial support for the purchase of plant and machinery.
Under the scheme, the National Credit Guarantee Trustee Company (NCGTC) will offer 60 percent guarantee coverage to Member Lending Institutions (MLIs) on loans up to ₹100 crore. Eligible MSMEs must have a valid Udyam Registration Number, and at least 75 percent of the project cost should be allocated for equipment purchases.
Loans up to ₹50 crore will have a repayment period of eight years with a two-year moratorium. Larger loans may have extended terms. An upfront contribution of 5 percent of the loan amount is required, while annual guarantee fees start at 1.5 percent after the first year.
The scheme will be active for four years or until guarantees reach ₹7 lakh crore. It is expected to accelerate industrial expansion and enhance India’s global manufacturing competitiveness.
Source: PIB