Mumbai: Finance Minister Nirmala Sitharaman launched the Mutual Credit Guarantee Scheme for MSMEs (MCGS—MSME), facilitating collateral-free loans of up to Rs. 100 crore to purchase machinery and equipment. The minister also handed over sanction letters to the first eleven beneficiaries under the scheme during a post-budget interaction in Mumbai.
Key Features of MCGS-MSME Include:
- The National Credit Guarantee Trustee Company Limited (NCGTC) will provide 60% guarantee coverage to Member Lending Institutions (MLIs) for loans sanctioned to eligible MSMEs.
- Borrowers must be registered MSMEs with a valid Udyam Registration Number.
- Loans up to Rs. 100 crore will be guaranteed, although the overall project cost may exceed this amount.
- At least 75% of the project cost must be allocated towards purchasing machinery or equipment.
- Loans up to Rs. 50 crore will have a repayment period of up to 8 years with a 2-year moratorium on principal installments.
- Loans above Rs. 50 crore will have an extended repayment period, and moratorium options may be considered.
The scheme will remain in effect for four years from the issuance of operational guidelines or until a cumulative loan guarantee of Rs. 7 lakh crore is reached, whichever comes earlier.
Strengthening the Manufacturing Sector
Currently, the manufacturing sector contributes 17% of India’s GDP and employs more than 2.73 crore workers. By ensuring easy credit access for the purchase of plant and machinery, the MCGS-MSME scheme is expected to strengthen domestic manufacturing, enhance productivity, and accelerate India’s growth as a global manufacturing hub.
With this initiative, the government aims to provide financial support to MSMEs, reducing dependence on collateral-based loans and fostering entrepreneurship across the country. The scheme aligns with India’s vision of self-reliance and industrial expansion, paving the way for a stronger and more competitive MSME sector.
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