Government has introduced amendments to the Mutual Credit Guarantee Scheme for MSMEs

Government has introduced amendments to the Mutual Credit Guarantee Scheme for MSMEs

¨     Government has introduced amendments to the Mutual Credit Guarantee Scheme for MSMEs.

¨     The objective of these changes is to strengthen the financial assistance available to small businesses.

¨     These amendments are aligned with the Union Budget 2025–26.

¨     This scheme focuses on improving access to credit. It targets manufacturing and export-oriented units.

¨ The National Credit Guarantee Trustee Company Limited provides credit guarantees under this scheme.

¨     It offers a guarantee coverage of 60% to lending institutions. This applies to loans of up to ₹100 crore.

¨     These loans are intended for the purchase of machinery and equipment.

¨   The aim of these reforms is to expand the coverage of the scheme. They also seek to reduce compliance requirements.

¨ The rule regarding the initial contribution of 5% has been modified. This contribution is now refundable.

¨ Refunds will commence from the fourth year onwards. One percent will be refunded annually, subject to the satisfactory performance of the loan.

¨   The eligibility criteria have been expanded. MSMEs in the service sector have now been included in the scheme.

¨ The condition regarding the minimum project cost allocated for machinery and equipment has been reduced from 75% to 60%.

¨ The government anticipates an increase in the flow of credit, with the aim of boosting manufacturing and exports.