Synopsis
The Indian government has introduced the Mutual Credit Guarantee Scheme for MSMEs, allowing loans up to Rs 100 crore for plant and equipment purchases. This initiative aims to empower the manufacturing sector, enhancing economic growth and job creation.Key Takeaways
- Loan up to Rs 100 crore for MSMEs.
- 60% guarantee coverage from NCGTC.
- Repayment period of up to 8 years.
- Zero annual guarantee fee in the first year.
- Scheme applicable for four years or until Rs. 7 lakh crore guarantee is issued.
New Delhi, Jan 30 (NationPress) The government has sanctioned the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME), designed to enable loans of up to Rs 100 crore for acquiring plant and machinery/equipment for qualifying companies.
This initiative will offer 60 percent guarantee coverage from the National Credit Guarantee Trustee Company Limited (NCGTC) to member lending institutions (MLIs) for credit amounts up to Rs 100 crore, granted to eligible MSMEs under the MCGS-MSME for the procurement of equipment/machinery, as stated by the Ministry of Finance.
Under this scheme, the borrower must be an MSME possessing a valid Udyam Registration Number. The guaranteed loan amount should not surpass Rs 100 crore, although project costs may exceed this amount, with a minimum of 75 percent of the project cost allocated for equipment/machinery.
“Loans up to Rs 50 crore under this scheme will have a repayment duration of up to 8 years, including a moratorium of up to 2 years on principal repayments. For loans exceeding Rs 50 crore, an extended repayment schedule and moratorium on principal repayments may be taken into account,” the scheme outlines.
An upfront contribution of 5 percent of the loan amount will be required at the time of guarantee cover application, and the annual guarantee fee for the loan will be zero in the year of sanction.
In the following three years, a fee of 1.5 percent per annum of the outstanding loan as of March 31 of the previous year will be applicable. Subsequently, the annual guarantee fee will be 1 percent per annum of the outstanding loan as of the previous year's March 31.
“This scheme will be relevant for all loans sanctioned under MCGS-MSME during the four years from the issue of operational guidelines or until a cumulative guarantee of Rs. 7 lakh crore is granted, whichever occurs first,” the ministry added.
The manufacturing sector currently contributes 17 percent to the nation's GDP and employs over 27.3 million workers.
“The MCGS-MSME scheme is anticipated to significantly enhance manufacturing and consequently support ‘Make in India’,” the ministry concluded.
