Mutual Credit Guarantee Scheme

Mutual Credit Guarantee Scheme Latest News

Recently, the central government approved the Mutual Credit Guarantee Scheme for micro, small and medium enterprises (MCGS-MSMEs), guaranteeing loans up to ₹100 crore.

About Mutual Credit Guarantee Scheme

• It aims at providing 60 per cent guarantee coverage by National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions (MLIs) for credit facility up to Rs 100 crore to eligible MSMEs for purchase of equipment/machinery.

Salient Features of Mutual Credit Guarantee Scheme

• 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 per cent of the project cost allocated for equipment or machinery. 
• Under the scheme for loans upto Rs.50 crore shall have repayment period of upto 8years with upto 2 years moratorium period on principal installments.
• For loans above Rs.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 crore are issued, whichever is earlier.

Mutual Credit Guarantee Scheme FAQs

Q1: What is the NCGTC scheme?

Ans: NCGTC means National Credit Guarantee Trustee Company set up on March 28, 2014 by Government of India under the Companies Act 1956

Q2: What is the 12-digit Udyam Registration number?

Ans: The Udyam registration is a mandatory certification issued by India's Ministry of Micro, Small, and Medium Enterprises (MSMEs) after signing up on the official government portal.

Q3: What is the credit guarantee scheme?

Ans: The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) was launched by the Government of India to make available collateral-free credit to the micro and small enterprise sector

Source: PIB