{"id":153706,"date":"2025-01-31T19:40:16","date_gmt":"2025-01-31T14:10:16","guid":{"rendered":"https:\/\/pwonlyias.com\/stage\/?post_type=current-affairs&#038;p=153706"},"modified":"2025-02-13T15:57:19","modified_gmt":"2025-02-13T10:27:19","slug":"mutual-credit-guarantee-scheme","status":"publish","type":"current-affairs","link":"https:\/\/pwonlyias.com\/stage\/current-affairs\/mutual-credit-guarantee-scheme","title":{"rendered":"Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME)"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The Government of India has approved the <\/span><b>Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME)<\/b><span style=\"font-weight: 400;\"> to strengthen the manufacturing sector.<\/span><\/p>\n<h2><span style=\"font-size: 18pt;\"><b>About Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME)<\/b><\/span><\/h2>\n<ul>\n<li><span style=\"font-weight: 400;\">The scheme fulfills the 2024-25 Budget announcement and aims to boost MSME credit access <\/span><b>for purchasing Plant &#038; Machinery \/ Equipment.<\/b><\/li>\n<li><b>Loan Eligibility:<\/b><span style=\"font-weight: 400;\"> MSMEs with a <\/span><b>valid Udyam Registration Number<\/b><span style=\"font-weight: 400;\"> are eligible.<\/span><\/li>\n<li><b>Maximum Loan Amount:<\/b><span style=\"font-weight: 400;\"> Loans of up to <\/span><b>\u20b9100 crore<\/b><span style=\"font-weight: 400;\"> can be covered under the scheme.<\/span><\/li>\n<li><b>Project Cost:<\/b><span style=\"font-weight: 400;\"> The total project cost can exceed \u20b9100 crore, but the minimum cost of equipment\/machinery must be <\/span><b>75% of the project cost<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li><b>Loan Tenure:<\/b>\n<ul>\n<li><span style=\"font-weight: 400;\">Loans up to <\/span><b>\u20b950 crore<\/b><span style=\"font-weight: 400;\"> have a <\/span><b>repayment period of up to 8 years<\/b><span style=\"font-weight: 400;\">, with a <\/span><b>2-year moratorium<\/b><span style=\"font-weight: 400;\"> on principal installments.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">For loans exceeding <\/span><b>\u20b950 crore<\/b><span style=\"font-weight: 400;\">, a <\/span><b>longer repayment and moratorium period<\/b><span style=\"font-weight: 400;\"> may be considered.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Guarantee Coverage:<\/b><span style=\"font-weight: 400;\"> The <\/span><b>National Credit Guarantee Trustee Company Limited (NCGTC)<\/b><span style=\"font-weight: 400;\"> will provide <\/span><b>60% guarantee coverage<\/b><span style=\"font-weight: 400;\"> to <\/span><b>Member Lending Institutions (MLIs)<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li><b>Upfront Contribution:<\/b><span style=\"font-weight: 400;\"> Borrowers must deposit <\/span><b>5% of the loan amount<\/b><span style=\"font-weight: 400;\"> at the time of applying for the guarantee cover.<\/span><\/li>\n<li><b>Annual Guarantee Fee:<\/b>\n<ul>\n<li><b>Nil<\/b><span style=\"font-weight: 400;\"> during the year of sanction.<\/span><\/li>\n<li><b>1.5% per annum<\/b><span style=\"font-weight: 400;\"> on outstanding loan amounts for the next <\/span><b>three years<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li><b>1% per annum<\/b><span style=\"font-weight: 400;\"> thereafter.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b>Duration of the Scheme: <\/b><span style=\"font-weight: 400;\">Applicable for <\/span><b>four years<\/b><span style=\"font-weight: 400;\"> from the issuance of operational guidelines or until the <\/span><b>cumulative guarantee reaches \u20b97 lakh crore<\/b><span style=\"font-weight: 400;\">, whichever comes first.<\/span><\/li>\n<li><b>Eligible Member Lending Institutions (MLIs)<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Scheduled Commercial Banks (SCBs)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Non-Banking Financial Companies (NBFCs)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">All India Financial Institutions (AIFIs) registered with NCGTC under this scheme.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><span class=\"vc_button\"><a href=\"https:\/\/store.pw.live\/govt-entrance-exams\/upsc-books\/upsc-modules?utm_source=SEO&#038;utm_medium=PW+Live&#038;utm_campaign=UPSC+Modules\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Check Out UPSC Modules From PW Store<\/span><\/a><\/span><\/p>\n<h2><span style=\"font-size: 18pt;\"><b>Impact of the Scheme<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>manufacturing sector<\/b><span style=\"font-weight: 400;\"> currently contributes <\/span><b>17% of India&#8217;s GDP<\/b><span style=\"font-weight: 400;\"> and employs over <\/span><b>27.3 million workers<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Aligns with the <\/span><b>&#8220;Make in India, Make for the World&#8221;<\/b><span style=\"font-weight: 400;\"> initiative to increase the <\/span><b>manufacturing sector\u2019s GDP share to 25%<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Facilitates easier access to credit for <\/span><b>MSMEs to purchase equipment\/machinery<\/b><span style=\"font-weight: 400;\">, accelerating industrial expansion.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Encourages <\/span><b>collateral-free loans<\/b><span style=\"font-weight: 400;\"> for MSMEs through banks and financial institutions.<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-size: 18pt;\"><b>Rationale behind the Scheme:<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Global supply chains are shifting, positioning <\/span><b>India as a key alternative supply source<\/b><span style=\"font-weight: 400;\"> due to its <\/span><b>raw materials, low labor costs, and manufacturing expertise<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">One of the largest costs in manufacturing is <\/span><b>Plant &#038; Machinery (P&#038;M) \/ Equipment<\/b><span style=\"font-weight: 400;\">. The scheme ensures that MSMEs can <\/span><b>expand their installed capacity<\/b><span style=\"font-weight: 400;\"> by securing affordable loans.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Industry associations have <\/span><b>consistently demanded<\/b><span style=\"font-weight: 400;\"> a <\/span><b>credit guarantee scheme<\/b><span style=\"font-weight: 400;\"> for manufacturing units, particularly <\/span><b>medium enterprises<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The introduction of <\/span><b>MCGS-MSME<\/b><span style=\"font-weight: 400;\"> will facilitate credit availability, <\/span><b>boost MSME growth<\/b><span style=\"font-weight: 400;\">, and strengthen India&#8217;s position in global manufacturing.<\/span><\/li>\n<\/ul>\n<p><b><i>Ready to boost your UPSC 2025 preparation?<\/i><\/b> <a href=\"https:\/\/www.pw.live\/batches\/upsc?utm_source=seo+upsc+batch&#038;utm_medium=seo+upsc&#038;utm_campaign=seo&#038;utm_id=upsc\" target=\"_blank\" rel=\"noopener\"><b><i>Join PW&#8217;s UPSC online courses<\/i><\/b><\/a><b><i> today!<\/i><\/b><\/p>\n<div class=\"vc_table_green\"><\/p>\n<table style=\"width: 99.6375%;\">\n<tbody>\n<tr>\n<td style=\"width: 111.19%; 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