MUTUAL CREDIT GUARANTEE SCHEME FOR MSMEs (MCGS-MSME) for Collateral Free Loans upto INR 100 Crores approved by Govt.
The aim of the scheme is to strengthen MSME manufacturing sector .
Government of India (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.
■ 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.
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