Mutual Credit Guarantee Scheme:
The central government approved the Mutual Credit Guarantee Scheme for micro, small and medium enterprises (MCGS-MSMEs), guaranteeing loans up to ₹100 crore.
- It will provide 60 percent guarantee coverage by the National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions (MLIs) for financing the eligible MSMEs, needed to purchase the equipment/machineries.
- Borrower should be an MSME with valid Udyam Registration Number;
- It provides a loan guarantee up to Rs 100 crore, with a minimum of 75 percent of the project cost allocated for equipment or machinery.
- Under the scheme for loans up to 50 crore shall have repayment period of up to 8 years with up to 2 years moratorium period on principal instalments.
- For loans above 50 crore, higher repayment schedule and moratorium period on principal instalments can be considered.
- Upfront (initial) contribution of 5% of the loan amount shall be deposited at the time of application of guarantee cover.
- Annual Guarantee Fee on loan under the Scheme shall be Nil during the year of sanction. During the next 3 years, it shall be 1.5% p.a. of loan outstanding as on March 31 of previous year.
- Thereafter, Annual Guarantee Fee shall be 1% p.a. of loan outstanding as on March 31 of previous year.
- The Scheme will be applicable to all loans sanctioned under MCGS-MSME during the period of 4 years from the date of issue of operational guidelines of the scheme or till cumulative guarantee of Rs. 7 lakh crores are issued, whichever is earlier.
