The introduction of the Crédit Mutuel guarantee system for MPME (MCGS-MSME) was approved by the center. This regime will offer 60% warranty coverage by the National Credit Guaraning Trustee Company Limited (NCGTC) to members of loan to credit facilities up / machines.
The scheme will offer 60% guarantee coverage to members’ loan institutions (MLIS) for credit facilities up to Rs.100 Brood granted to qualified MPMs. MLIs include all planned commercial banks (SCB), non -banking financial companies (NBFC) and all of India’s financial institutions (AIFIS) which are part of NCGTC within the framework of this initiative.
Loans up to Rs 100 Core will be issued for the acquisition of factories and machines or equipment are eligible for warranty coverage within the framework of the regime, which aims to support the manufacturing sector.
The regime will apply to all loans punishable under MCGS-MSME within 4 years from the date of issue of the regime’s operational directives or up to a cumulative warranty of RS. 7 CRORE LAKH are reached , according to the first possibility.
“To give a boost to the manufacture by facilitating the availability of credit for the purchase of factory and machines / equipment”, the MUTUAL credit warranty regime (MCGS-MSME) is being introduction. The regime will facilitate loans without guarantee by banks and finances Institutions to MPMEs that need debt capital for their expansion and growth, “the Ministry of Finance said in a statement.
Key characteristics
- To be eligible for the loan guarantee regime, the borrower must be a micro, small and medium -sized (MSME) recorded with a valid Udyam recording number.
- The amount of the guaranteed loan must not exceed RS.100 crosses, while the cost of the project may be higher. The minimum cost of equipment / machines must be 75% of the cost of the project.
- For loans going up to RS50, the repayment period can reach 8 years with a moratorium period of up to 2 years on the main payments. Loans higher than RS.50 Core can have a different reimbursement calendar and a moratorium period.
- An initial contribution of 5% of the loan amount must be filed at the time of the warranty coverage request.
- There is no annual guarantee fees during the year of sanction.
- From the second to the fourth year, the costs are 1.5% of the amount of the loan in progress on March 31 of the previous year.
- After that, the annual guarantee costs are 1% of the amount of the loan in progress on March 31 of the previous year.
