Mutual Credit Guarantee Scheme

Mutual Credit Guarantee Scheme Latest News

The Government has modified the Mutual Credit Guarantee Scheme (MCGS) to support Micro, Small and Medium Enterprises (MSME) Manufacturers and Exporters in line with Budget 2025-26. 

About Mutual Credit Guarantee Scheme

• It provides 60 % guarantee coverage by National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions for credit facilities up to 100 crore rupees sanctioned to eligible MSMEs under MCGS-MSME for purchase of equipment and machinery. 

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Salient Features of Mutual Credit Guarantee Scheme

• Target: Borrower should be an MSME with valid Udyam Registration Number;
• The eligibility criteria have also been expanded to service sector MSMEs.
• The minimum project cost requirement towards machinery and equipment has been reduced to 60 per cent from the earlier 75 per cent.
• The 5% upfront contribution has been made refundable, with one per cent returned each year from the fourth year onwards, subject to satisfactory loan performance.
• The credit guarantee would expire after 10 years, as compared to the unspecified period in the earlier scheme.
• It is applicable to all loans sanctioned under MCGS-MSME during the period of 4 years or till cumulative guarantee of Rs. 7 lakh crore are issued, whichever is earlier.
• Eligible exporters
  • Profitable units having exported at least 25% of their sales turnover in each of previous 3 financial years
  • Guaranteed loan amount is pegged at ₹20 crore, and upfront contribution is 2% of the loan amount, a maximum of ₹40 lakh, with 1% each refundable in the 4th and 5th year of the guarantee period.

Source: News On Air