Govt launches credit guarantee scheme for MSMEs announced in FY25 Budget

Under the scheme, the MSMEs should have a valid Udyam Registration Number; the loan amount guaranteed under the scheme will not exceed Rs 100 crore; project cost could be of higher amounts, and minimum cost of equipment/ machinery will be 75 per cent of project cost. Loan upto Rs 50 crore under the scheme will have repayment period of upto 8 years with upto 2 years moratorium period on principal installments. For loans above Rs 50 crore, higher repayment schedule and moratorium period on principal installments can be considered, it said.

An initial contribution of 5 per cent of the loan amount will need to be deposited at the time of application of guarantee cover. The Annual Guarantee Fee on loan under the scheme will be nil during the year of sanction, it said, adding, it would be 1.5 per cent per annum of loan outstanding as on March 31 of previous year for the next three years, and thereafter, annual guarantee fee shall be 1 per cent per annum of loan outstanding as on March 31 of previous year, it said.

The scheme will be applicable to all loans sanctioned under MCGS-MSME during the period of four 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, it said.

The scheme is expected to facilitate the availability of credit for purchase of plant and machinery / equipment by MSMEs and give a “major boost to manufacturing and thereby to ‘Make in India’”, it said.

With realigning global supply chains, India is emerging as an alternative supply source given its raw materials, low labour costs, growing manufacturing knowhow, and entrepreneurial ability, the Ministry said, adding that one of the major costs involved in manufacturing is the fixed cost of plant and machinery (P&M)/ equipments. “With availability of credit to expand the installed capacity of manufacturing units, it can be expected that the manufacturing will grow at a faster pace,” it said.