Mutual Credit Guarantee Scheme for MSMEs

On 29th January 2025, the Central Government approved the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSMEs).

The scheme aims to strengthen MSME access to institutional credit by providing 60% guarantee coverage for loans sanctioned towards purchase of equipment and machinery.

Aspect	Details
Objective	The scheme aims to improve credit availability for MSMEs by reducing lending risk for financial institutions.
Target Borrowers	Eligible beneficiaries are MSMEs possessing a valid Udyam Registration Number.
Loan Limit	Credit facilities of up to Rs. 100 crore can be sanctioned for purchase of equipment and machinery.
Guarantee Coverage	The National Credit Guarantee Trustee Company Limited (NCGTC) provides 60% guarantee coverage to Member Lending Institutions (MLIs).
Project Cost Condition	At least 75% of the project cost must be allocated toward purchase of equipment or machinery.
Scheme Duration	The scheme will remain applicable for four years or until cumulative guarantees worth Rs. 7 lakh crore are issued, whichever is earlier.
Technology Upgradation	The focus on machinery and capital goods is intended to support technology upgradation and improve MSME productivity.

PT Facts

NCGTC: Government of India company under the Ministry of Finance.
Udyam Registration: Official online registration system for MSMEs.
Credit Guarantee: Helps reduce lender risk for MSME loans.
Collateral-light Loans: Credit guarantee mechanisms support easier loan access.
Capital Goods Focus: Scheme encourages machinery modernisation and efficiency.
MLIs: Member Lending Institutions receive guarantee protection under the scheme.

Source:

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