In February 2025, Union Minister Nirmala Sitharaman, Ministry of Finance (MoF) and Ministry of Corporate Affairs (MoCA) launched the ‘Mutual Credit Guarantee Scheme for Micro, Small and Medium Enterprises (MCGS-MSME)’ in Mumbai, Maharashtra to support MSME sector in India.
- It is a key initiative of Government of India (GoI) announced in the Union Budget for Financial Year 2024-25 (FY25).
Key People: Union Minister of State (MoS) Pankaj Chaudhary, MoF; Tuhin Kanta Pandey, Secretary, MoF; Ajay Seth, Secretary of Department of Economic Affairs (DEA), MoF; Ravi Agarwal, Chairman of Central Board of Direct Taxes (CBDT); and other officials from MoF were also present at the event.
About Mutual Credit Guarantee Scheme for Micro, Small and Medium Enterprises (MCGS-MSME)’:
i.The MCGS-MSME aims to facilitate a maximum loan of Rs 100 crore to MSMEs for purchase of machinery or equipment without collateral.
- Minimum 75% of the total project cost must be for purchasing equipment or machinery.
- The scheme is available for 4 years or until Rs 7 lakh crore in guarantees are issued, whichever comes first.
ii.Mumbai (Maharashtra)-based National Credit Guarantee Trustee Company Limited (NCGTC), a private limited company which works under MoF, will provide 60% guarantee coverage to Member Lending Institutions (MLIs) for loans approved to eligible MSMEs.
- Interest rate for this loan is charged as per the Reserve Bank of India(RBI) guidelines.
iii.In order to avail the benefit of the initiative, the borrower is required to be an MSME with a valid Udyam Registration Number(URN).
- URN is a 16-digit unique registration number for a Udyam Certificate holder. It is issued by the Ministry of MSME(MoMSME) under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act 2006).
iv.The repayment period for loans up to Rs 50 crore loan will be up to 8 years with up to 2 years moratorium on principal instalments.
- For loans above Rs 50 crore, higher repayment schedule and moratorium period on principal instalments will be considered.
Key Points:
i.During the event, Union Minister Nirmala Sitharaman, virtually inaugurated the 1st ‘Sachal Aaykar Seva Kendra’ in Navy Nagar Colaba, Mumbai to provide access to digital services, facilitate guidance for grievance redressal and to promote tax awareness.
ii.Union Minister also handed over keys to the home owners benefitted by the Special Window for Affordable and Mid-Income Housing (SWAMIH) Investment Fund of Mumbai (Maharashtra)-based SBI Ventures Limited (formerly known as SBICAP Ventures Limited).
- As of January 24 2025, SWAMIH Fund has successfully provided more than 50,000 homes to eligible beneficiaries. Also, MoF plans to deliver an additional 20,000 homes annually for the next 3 years.
- In the Union Budget for FY26, MoF announced the establishment of SWAMIH Fund-2 with an estimated budget Rs 15,000 crore and aims to accelerate the completion of another 1 lakh units.
- This fund will receive financial support from the government, banks, and private investors.
Note: The Union Budget for FY26 increased the Foreign Direct Investment (FDI) limit for the insurance sector from 74% to 100%.
iii.She introduced a new scheme named ‘Prime Minister Dhan-Dhaanya Krishi Yojana (PMDKY)’ which aims to enhance agricultural productivity across 100 districts for low agricultural output.
- The scheme is estimated to benefit 1.7 crore farmers to improve agricultural productivity, enhance irrigation facilities and to provide short-term as well long-term credit.
About Ministry of Finance (MoF):
Union Minister- Nirmala Sitharaman (Rajya Sabha- Karnataka)
Minister of State (MoS)- Pankaj Chaudhary (Constituency- Maharajganj, Uttar Pradesh, UP)
