Mutual Credit Guarantee Scheme for MSMEs

In line with the guidelines of NCGTC, a new credit guarantee scheme “Mutual Credit Guarantee Scheme for MSMEs” is introduced. Detailed Scheme guidelines are mentioned as below:

S.N. Parameters Features
1Name of SchemeMutual Credit Guarantee Scheme for MSMEs (MCGSMSME).
2PurposeTo provide guarantee coverage for term loan assistance upto Rs.100 crore to eligible Micro, Small and Medium Enterprises (MSMEs) for their projects involving purchase of equipment/machinery.
3

Eligible Borrower

  • Entity should be engaged in manufacturing activity.
  • It should be an MSME with valid Udyam Registration Number at the time of sanction.
  • The borrower account, otherwise eligible under the scheme, should not be an NPA with any lender as on the date of sanction/disbursement of loan under the scheme.

Note: - Borrower should be MSME entity at the time of sanction. If after availing loan, borrower become large entity, even then borrower would be eligible for guarantee coverage.

4

Eligibility Criteria

The eligibility criteria under the scheme are as under:

  • Existing as well as new projects/units for purchase of equipment/machinery.
  • Minimum cost of equipment/ Machinery is 75% of project cost.
  • Scheme is admissible for all business activities. There is no negative list for coverage.
5

Scheme Duration

The scheme would be available for a period of 4 years from the date of issue of guidelines i.e. 27.01.2025 or till loans cumulating to Rs. 7.00 lakhs crore are issued, whichever is earlier, by NCGTC.
6

Nature of Facility

Term Loan.
7

Quantum of loan

  • Maximum loan amount for guarantee support under the scheme is Rs. 100.00 crores.

Note: - Loan amount can be greater than Rs. 100.00 crore. For all such cases, two separate repayment schedules to be generated, one for Rs. 100.00 crore and another for remaining loan sanction amount. Both should have same moratorium period and total repayment period. Any recovery/repayment received against the overall loan should be adjusted proportionately against the two.

8

Margin

Term Loan - 25% of project cost.
9

Rate of Interest

As per extant guidelines for MSME advances (Both Schematic and Non-Schematic) for all eligible borrowers under this credit guarantee scheme.
10

Repayment Period for Loan under this scheme

  • For Term Loan upto Rs. 50.00 crores: Repayment period of maximum upto 8 years with upto 2 years moratorium period on principal instalments. (Upto 10 years including moratorium period)
  • For Term Loan above Rs. 50.00 crores: Repayment period of maximum upto 12 years with upto 3 years moratorium period on principal instalments. (Upto 15 years including moratorium period)

NOTE: Interest to be repaid as and when applied.

11

Primary Security

  • Hypothecation / mortgage of the assets created out of Bank finance under the Scheme (under both Greenfield and Brownfield projects).
  • Documentation and charge creation should be done immediately as per extant guidelines.
  • Necessary documentation in this regard to be done prior to the account turning NPA, failing which claim shall not be considered.
  • Charge creation in any case should be done before the account turning NPA for being eligible under this scheme.
  • Bank shall create charge in favour of itself and on behalf of NCGTC.
12

Collateral Security

  • No collateral security should be insisted.

In case, collateral security is obtained then, the guarantee will be available only on the loan amount net off value of collateral security. The sanctioning authority should ensure the creation of charge on the stipulated security immediately as per extant guidelines.

13

Guarantee coverage

  • Term loan upto Rs. 100.00 crores provided under MCGSMSME scheme shall be provided credit guarantee coverage by NCGTC.
  • Guarantee cover: 60% of amount of default.
14

Initial Contribution

At the time of application for guarantee cover, 5% of loan amount not exceeding Rs. 5.00 crore to be deposited with the trust as upfront (initial) contribution.
15

Takeover of Account

Allowed subject to terms and conditions

Nodal officer for MCGS scheme:
Name: Bhaswati Koch
Email Id:- sme@mahabank.co.in bhaswati.koch@mahabank.co.in cmmsmegov@mahabank.co.in
Contact No.: - 020-25614419