Government Launches Mutual Credit Guarantee Scheme for MSMEs to Boost Equipment Purchase
The Indian government has introduced the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) to provide financial support to Micro, Small, and Medium Enterprises (MSMEs) looking to purchase equipment or machinery. Under this scheme, the National Credit Guarantee Trustee Company Limited (NCGTC) will offer a 60% guarantee coverage on credit facilities of up to Rs. 100 crore sanctioned by Member Lending Institutions (MLIs).
Who Can Apply?
To benefit from this scheme, MSMEs must meet the following eligibility criteria:
- The MSME must have a valid Udyam Registration Number.
- It should not be classified as a Non-Performing Asset (NPA) by any lender.
- The cost of equipment or machinery should be at least 75% of the total project cost.
How the Scheme Works
The scheme is implemented by NCGTC, a company under the Ministry of Finance, Government of India. Banks, All India Financial Institutions (AIFIs), and Non-Banking Financial Companies (NBFCs) can participate as lending institutions after signing an agreement with NCGTC.
Once a loan is sanctioned to an eligible MSME, the lending institution submits the loan details on NCGTC’s portal along with the required fees. After verification, the lender receives a confirmation that the loan is guaranteed under the scheme, ensuring lower risk and better access to finance for MSMEs.
Why is this Important?
MSMEs play a crucial role in India’s economy, but many struggle to secure funding due to high risks perceived by lenders. The MCGS-MSME aims to bridge this gap by providing financial security, making it easier for small businesses to invest in new technology and equipment. This initiative is expected to drive economic growth, boost productivity, and create more job opportunities.
For MSMEs looking to upgrade their machinery and enhance efficiency, this scheme offers a golden opportunity. Interested enterprises should check their eligibility and approach their banks or NBFCs to avail of the benefits.
Stay tuned for more updates on financial schemes designed to support Indian businesses!