New Delhi: The government has approved the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) that would facilitate loans up to Rs 100 crore for purchase of plant and machinery/equipment for eligible firms.
The scheme would provide 60 per cent 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, according to the Ministry of Finance.
According to the scheme, the borrower should be an MSME with valid Udyam Registration Number, loan amount guaranteed should not exceed Rs 100 crore, project cost could be of higher amounts also and minimum cost of equipment /machinery is 75 per cent of the project cost.
“Loan upto Rs 50 crore under the scheme shall have repayment period of upto 8 years with up to 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,” according to the scheme.
Upfront (initial) contribution of 5 per cent of the loan amount shall be deposited at the time of application of guarantee cover and annual guarantee fee on loan under the scheme shall be zero during the year of sanction.
During the next three years, it shall be 1.5 per cent per annum of loan outstanding as on March 31 of previous year. Thereafter, annual guarantee fee shall be 1 per cent per annum 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,” according to the ministry.
Manufacturing sector currently comprises 17 per cent of the nation’s GDP and over 27.3 million workers.
“The MCGS-MSME scheme is expected to give a major boost to manufacturing and, thereby, to ‘Make in India,’” said the ministry.
(IANS)
