FM Sitharaman Unveils Mutual Credit Guarantee Scheme for MSMEs
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Synopsis
The Central Government launched the Mutual Credit Guarantee Scheme for MSMEs to enhance credit accessibility for micro, small, and medium enterprises, enabling collateral-free loans up to Rs 100 crore and supporting India's manufacturing sector.
Key Takeaways
- Launch date: February 17, 2025
- Collateral-free loans up to Rs 100 crore
- 60% guarantee coverage from NCGTC
- Targeting MSMEs with valid Udyam Registration
- Focus on boosting the manufacturing sector
Mumbai, Feb 17 (NationPress) The Central Government on Monday introduced the 'Mutual Credit Guarantee Scheme for MSMEs', a key initiative revealed in the Union Budget 2024-25 aimed at enhancing the micro, small, and medium enterprises.
This scheme allows MSMEs to access collateral-free loans for amounts up to Rs 100 crore for the acquisition of machinery, equipment, or plant.
Under this initiative, the National Credit Guarantee Trustee Company Ltd (NCGTC) provides a 60 per cent guarantee coverage for member lending institutions (MLIs) on credit facilities up to Rs 100 crore for qualifying MSMEs under the MCGS-MSME.
During the launch event, Union Finance Minister Nirmala Sitharaman also handed out sanction letters to eligible MSMEs in Mumbai.
This scheme aims to simplify the availability of credit for MSMEs and significantly enhance the manufacturing sector in India.
Per the details of the scheme, borrowers need to be registered MSMEs with a valid Udyam Registration Number. The guaranteed loan amount must not exceed Rs 100 crore, although project costs can be higher, with the minimum equipment/machinery cost being 75 per cent of the total project cost.
FM Sitharaman and Minister of State for Finance Pankaj Chaudhary also presented keys to homebuyers benefiting from the SWAMIH (Special Window for Affordable and Mid-Income Housing) Fund during the post-Budget engagement with stakeholders.
As of January 24, 2025, the SWAMIH Fund has successfully enabled the delivery of over 50,000 homes, with a goal to provide an additional 20,000 homes annually over the next three years.
In the Union Budget 2025-26, a new SWAMIH Fund 2 is set to be launched as a blended finance mechanism involving contributions from the government, banks, and private investors.
This fund, amounting to Rs 15,000 crore, aims at the swift completion of another 1 lakh housing units.
In a media session during the event, the Finance Minister remarked that the last three Budgets have prioritized enhancing MSMEs, including the government-backed loans introduced in the current Budget.
She emphasized that the government’s focus remains on capital expenditure rather than consumption expenditure.
FM Sitharaman also indicated that the Centre is pursuing further reforms in the insurance sector, where 100 per cent foreign direct investment (FDI) has been permitted.
The current Budget proposes to elevate the FDI limit for the insurance sector from 74 per cent to 100 per cent.
Measures are being implemented to ensure that citizens' premium payments for insurance remain within the country.
