{"id":36464,"date":"2025-01-30T19:20:00","date_gmt":"2025-01-30T13:50:00","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=36464"},"modified":"2025-01-30T19:20:01","modified_gmt":"2025-01-30T13:50:01","slug":"msmes-credit-guarantee-scheme","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/30-01-2025\/msmes-credit-guarantee-scheme","title":{"rendered":"Credit Guarantee Scheme for MSMEs\u00a0"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>In News<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Government of India has introduced the<strong> Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME)<\/strong>, aiming to ease credit constraints and propel growth in the manufacturing sector.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The <strong>Micro, Small, and Medium Enterprise (MSME) sector <\/strong>forms the backbone of the Indian economy, contributing significantly to <strong>employment, innovation, and economic growth.\u00a0<\/strong><\/li>\n\n\n\n<li>Within the MSME landscape, the <strong>manufacturing sector <\/strong>plays a crucial role, accounting\u00a0 providing jobs to <strong>27.3 million workers<\/strong>.and\u00a0 providing jobs to <strong>27.3 million workers.<\/strong><\/li>\n\n\n\n<li>However, access to finance remains a major hurdle for MSME manufacturers, hindering their ability to modernize, expand, and compete effectively.\u00a0<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"d5d5d5\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"630\" height=\"364\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/01\/revised-MSME-classification.png\" alt=\"revised-MSME-classification\" class=\"not-transparent wp-image-36465\" style=\"--dominant-color: #d5d5d5; width:538px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/01\/revised-MSME-classification.png 630w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/01\/revised-MSME-classification-300x173.png 300w\" sizes=\"auto, (max-width: 630px) 100vw, 630px\" \/><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Features of MCGS-MSME<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Guarantee Coverage:<\/strong> The scheme offers 60% guarantee coverage to Member Lending Institutions (MLIs) on loans up to \u20b9100 crore sanctioned to eligible MSMEs for the purchase of plant and machinery.\u00a0<\/li>\n\n\n\n<li><strong>Eligibility:<\/strong> <strong>\u00a0MSMEs with a valid Udyam Registration Number<\/strong>.<\/li>\n\n\n\n<li><strong>Loan Amount and Usage:<\/strong> A minimum of 75% of the project cost must be utilized for the acquisition of equipment and machinery, directly supporting manufacturing capacity expansion.<\/li>\n\n\n\n<li><strong>Repayment<\/strong><strong> Terms (Up to \u20b950 crore) <\/strong>Maximum 8-year repayment, with a 2-year principal moratorium.\n<ul class=\"wp-block-list\">\n<li><strong>Above \u20b950 crore: <\/strong>Longer repayment and moratorium periods may be considered.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Guarantee Fees<\/strong>: No guarantee fee is charged in the first year. For the subsequent three years, the fee is 1.5% per annum of the outstanding loan amount as of March 31st of the previous year.\u00a0<\/li>\n\n\n\n<li><strong>Scheme Duration:<\/strong> The MCGS-MSME will be in effect for four years from the date of the issuance of operational guidelines or until cumulative guarantees of \u20b97 lakh crore are issued, whichever comes earlier.\u00a0<\/li>\n\n\n\n<li><strong>Participating Lenders:<\/strong> All Scheduled Commercial Banks (SCBs), NBFCs registered with the National Credit Guarantee Trustee Company Limited (NCGTC).<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Impact on MSME &amp; Manufacturing<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Supports <strong>\u2018Make in India, Make for the World\u2019<\/strong> by increasing manufacturing output.<\/li>\n\n\n\n<li>Helps MSMEs scale up with <strong>easier access to large credit for expansion.<\/strong><\/li>\n\n\n\n<li>Strengthens India\u2019s position as a <strong>global alternative in supply chains.<\/strong><\/li>\n\n\n\n<li>Aims to increase manufacturing\u2019s share in <strong>GDP from 17% to 25%.<\/strong><\/li>\n\n\n\n<li>Expanded MSMEs generate <strong>more employment opportunities.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Other Key MSME Financial Support Schemes in India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>CGTMSE (Credit Guarantee Fund Trust for MSEs):<\/strong> Offers collateral-free loans up to \u20b92 crore. Provides up to 85% guarantee coverage to reduce lender risk.<\/li>\n\n\n\n<li><strong>TReDS (Trade Receivables Discounting System): <\/strong>Online platform for MSMEs to get payments faster from large companies.<\/li>\n\n\n\n<li><strong>Emergency Credit Line Guarantee Scheme (ECLGS): <\/strong>\u20b93 lakh crore relief package during COVID-19. 100% government-backed guarantee for loans.<\/li>\n\n\n\n<li><strong>RBI Measures to Boost MSME Lending: Priority Sector Lending (PSL): <\/strong>Banks mandated to allocate a portion of their loans to MSMEs.\n<ul class=\"wp-block-list\">\n<li><strong>Restructuring of MSME Loans:<\/strong> RBI allowed one-time loan restructuring for stressed MSMEs to prevent defaults.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong><em>Note: For Detailed Analysis about this you can refer our Daily News Decoded Video on <\/em><\/strong><a href=\"https:\/\/youtube.com\/playlist?list=PL1sgm5x8M9FAIX1lbd9Ddm88Ei4ebMHB6&amp;si=9HH5azS9JzZcNO-p\" target=\"_blank\" rel=\"noopener\"><strong><em>NEXTIAS Youtube Channel<\/em><\/strong><\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Source: ET<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Government of India has introduced the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME), aiming to ease credit constraints and propel growth in the manufacturing sector.<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-36464","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/36464","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=36464"}],"version-history":[{"count":1,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/36464\/revisions"}],"predecessor-version":[{"id":36466,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/36464\/revisions\/36466"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=36464"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=36464"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=36464"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}