Government modifies Mutual Credit Guarantee Scheme to support MSME manufacturers and exporters

Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) was launched in January 2025. The scheme provides 60% guarantee coverage by National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions (MLIs) for credit facility up to Rs 100 crore sanctioned to eligible Micro, Small and Medium Enterprises (MSMEs) under MCGS-MSME for purchase of equipment/machinery.

Based on the feedback received from the MSMEs and lending institutions, some modifications have been done.

Modifications in the existing “MCGS–MSME” scheme:

* Upfront contribution: 5% upfront contribution made refundable, 1% each from 4th year onwards, subject to satisfactory performance of loan account.

* Eligibility: Service sector MSMEs also included in the scheme.

* Minimum project cost towards machinery/equipment: Cost of equipment/machinery reduced up to 60% of project cost (from earlier 75%).

* Guarantee tenure: Guarantee to expire after 10 years.

Special provisions have been incorporated in the scheme for exporters:

* Eligible exporters: Profitable units having exported at least 25% of their sales turnover in each of previous 3 financial years and satisfying certain export realisation conditions.

* Guaranteed loan amount: Rs 20 crore.

* Upfront contribution:  2% of loan amount (max Rs 40 lakh); 1% each refundable in 4th and 5th year of the guarantee period.

* Guarantee coverage: 75% of the amount in default.

* Guarantee fee: First year: nil; Thereafter, every year: 0.50% of loan outstanding.

Details of the modified scheme are available on www.ncgtc.in (NCGTC website), informed a Ministry of Finance release. 

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