Mutual Credit Guarantee Scheme to Strengthen MSME Manufacturing
Sector for providing 60% Guarantee Coverage, Fulfilling the Budget
Announcement of 2024-25 Approved
·
Loans
upto Rs. 100 crore for purchase
of Plant and Machinery / Equipment are eligible for guarantee coverage giving a
boost to manufacturing sector
·
Scheme
offers 60% guarantee coverage to Member Lending Institutions (MLIs*) for credit
facility upto Rs.100 crore sanctioned to eligible MSMEs
GoI has approved introduction of Mutual Credit Guarantee Scheme
for MSMEs (MCGS- MSME) for providing 60% guarantee coverage by National Credit Guarantee
Trustee Company Limited (NCGTC) to Member Lending Institutions (MLIs*) for credit
facility upto Rs.100 crore sanctioned to eligible MSMEs
under MCGS-MSME for purchase of equipment / machinery.
Salient
Features of The Scheme
·
Borrower
should be an MSME with valid Udyam Registration Number;
·
Loan
amount guaranteed shall not exceed Rs.100 crore
·
Project
Cost could be of higher amounts also
·
Minimum
cost of equipment /machinery is 75% of project cost
·
Loan
upto Rs.50 crore under the Scheme shall have repayment
period of upto 8 years with upto
2 years moratorium period on principal instalments. 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.
Major
Impact
Manufacturing
sector currently comprises 17% of the nation’s GDP and over 27.3 million workers.
Hon’ble Prime Minister’s has given a call for ‘Make in India, Make for the World’ and has signalled that India is ready and
keen to increase the share of manufacturing to 25% of GDP. The Mutual Credit Guarantee
Scheme for MSMEs (MCGS-MSME) is expected to facilitate the availability of credit
for purchase of Plant and Machinery / Equipment by MSMEs and give a major boost
to manufacturing and thereby to Make in India.
Background
Global
supply chains are realigning. India is emerging as an alternative supply source
given its raw materials, low labour costs, growing manufacturing knowhow, and entrepreneurial
ability. One of the major costs involved in manufacturing is the fixed cost of Plant
and Machinery (P&M)/ Equipment’s. With availability of credit to expand the
installed capacity of manufacturing units, it can be expected that the manufacturing
will grow at a faster pace. Also, the need for a credit guarantee scheme for the
manufacturing units, particularly for the enterprises in the medium category has
been raised by industry associations from time to time. So, to give a boost to manufacturing
by facilitating the availability of credit for purchase of Plant and Machinery /
Equipment, ‘Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) is being introduced.
The scheme will facilitate collateral free loans by banks and financial institutions
to MSMEs who are in need of debt capital for their expansion and growth.
*MLIs
- All Scheduled Commercial Banks (SCBs), Non-Banking Financial Companies (NBFCs)
and All India Financial institutions (AIFIs), who register with NCGTC under the
Scheme.