Minister of State for Finance, Pankaj Chadhary on Tuesday, 18 March 2025, apprised the Rajya Sabha of the launch of the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) which enables eligible Micro, Small, and Medium Enterprises (MSMEs) to avail credit facilities up to ₹100 crore secured by a 60% guarantee facilitated by the scheme.
The scheme, implemented by the National Credit Guarantee Trustee Company Limited (NCGTC) – a wholly owned entity of the Department of Financial Services, Ministry of Finance encompasses Member Lending Institutions (MLIs), including Scheduled Commercial Banks (SCBs), All India Financial Institutions (AIFIs), and Non-Banking Financial Companies (NBFCs).
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The 60% guarantee facility for credit facility upto ₹100 Crore is specifically intended for the purchase of equipment and machinery, ensuring that MSMEs can enhance their operational capacities and drive economic growth.
A MSME may be eligible for this scheme if it possesses a valid Udyam Registration Number and is not classified as a Non-Performing Asset (NPA) with any lender. Additionally, the cost of equipment or machinery being financed must constitute at least 75% of the total project cost. The safeguard criteria ensures that only financially sound and growth-oriented enterprises benefit from the scheme.
Once an MLI sanctions a loan to an eligible MSME, it must submit the loan details on the NCGTC portal along with the required fees. Upon successful verification, NCGTC confirms the guarantee coverage for the loan, thus providing lenders with a safety net that encourages increased lending to MSMEs.
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The changes are consistent with other recent measures undertaken by the Government to ease the direct taxation compliance burdens on small businesses and individual taxpayers
These include provisions for presumptive taxation under Sections 44AD and 44AE of the Income-tax Act, tax audit relaxations under Section 44AB, the omission of Tax Collected at Source (TCS) on the sale of specified goods under Section 206C, and the rationalization of Tax Deducted at Source (TDS) rates.
The proposed changes are slated to provide a boost and drive growth, inclusivity and access to funds within the MSME Sector.
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