DBT Bureau
Pune, 22 March 2026
Mutual Credit Guarantee Scheme for MSMEs (MCGS- MSME) was launched in January 2025. The scheme provides 60% guarantee coverage by National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions (MLIs) for credit facility upto ₹ 100 crore sanctioned to eligible Micro, Small and Medium Enterprises (MSMEs) under MCGS-MSME for purchase of equipment/ machinery.
Based on the feedback received from the MSMEs and lending institutions, some modifications have been done.
Modifications in the existing “MCGS–MSME” scheme:
- Upfront Contribution: 5% Upfront contribution made refundable, 1% each from 4th year onwards, subject to satisfactory performance of loan account.
- Eligibility: Service Sector MSMEs also included in the Scheme.
- Minimum project cost towards Machinery / Equipment: Cost of equipment/ machinery reduced upto 60% of project cost (from earlier 75%).
- Guarantee Tenure: Guarantee to expire after 10 years.
Special provisions have been incorporated in the scheme for exporters:
- Eligible exporters: Profitable units having exported at least 25% of their sales turnover in each of previous 3 financial years and satisfying certain export realisation conditions.
- Guaranteed Loan Amount: ₹20 crore.
- Upfront Contribution: 2% of loan amount (Max ₹40 Lacs); 1% each refundable in 4th and 5th year of the guarantee period.
- Guarantee Coverage: 75% of the amount in default.
- Guarantee Fee: First year: Nil; Thereafter, every year: 0.50% of loan outstanding.
Source: PIB
