Mutual Credit Guarantee Scheme for MSMEs approved: 60% cover on loans up to ₹100 crore
The Government approved the Mutual Credit Guarantee Scheme for MSMEs on 29 January 2025, under which NCGTC will give 60% guarantee coverage on loans up to ₹100 crore for buying plant, machinery or equipment.
Summary
The Government of India approved the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) on 29 January 2025, fulfilling a 2024-25 Budget announcement. Under MCGS-MSME, the National Credit Guarantee Trustee Company (NCGTC) will provide 60% guarantee coverage to member lending institutions for loans of up to ₹100 crore to MSMEs with a valid Udyam Registration Number for buying equipment or machinery, which must be at least 75% of project cost. Borrowers pay an upfront contribution of 5% of the loan, and the scheme covers loans sanctioned over four years from its operational guidelines or until cumulative guarantees reach ₹7 lakh crore, whichever is earlier.
Key facts
- Approved
- 29 January 2025
- Guarantor
- NCGTC
- Coverage
- 60% on loans up to ₹100 crore
- Purpose
- Plant, machinery, equipment (min 75% of project cost)
- Upfront contribution
- 5% of loan
- Validity
- 4 years or ₹7 lakh crore guarantees, whichever earlier
- Eligibility
- Valid Udyam Registration
Practice MCQs 2 questions
What guarantee coverage does the Mutual Credit Guarantee Scheme for MSMEs, approved in January 2025, provide to lenders?
Show answer
Correct answer: B — 60%
PIB 2097455: NCGTC provides 60% guarantee coverage to member lending institutions for credit up to ₹100 crore.
Consider the following statements about MCGS-MSME: 1. Loans up to ₹100 crore are eligible for guarantee cover. 2. Equipment or machinery must be at least 75% of the project cost. 3. The guarantee is provided by SIDBI. Which of the statements given above is/are correct?
Show answer
Correct answer: B — 1 and 2 only
PIB 2097455: loans up to ₹100 crore are covered and equipment must be at least 75% of project cost; the guarantee is given by the National Credit Guarantee Trustee Company (NCGTC), not SIDBI.