FM Nirmala Sitharaman Launches Mutual Credit Guarantee Scheme for MSMEs
Moneylife Digital Team 17 February 2025
The Union government on Monday launched the 'mutual credit guarantee scheme for micro, small, and medium enterprises (MCGSMSME)', which was announced in the Union Budget 2024-25, to support the MSME sector. Unveiling the scheme in Mumbai, Union finance minister (FM) Nirmala Sitharaman also distributed sanction letters to eligible MSMEs under the scheme.
 
During a media interaction at the event, the FM stated that the last three Budgets have focused on supporting MSMEs, including the government-guaranteed loan scheme introduced in the current Budget.
 
She emphasised that the government's priorities have not shifted from capital expenditure to consumption expenditure.
 
FM Sitharaman further stated that the Union government is working on additional reforms in the insurance sector, where 100% foreign direct investment (FDI) has been permitted.
 
The current Budget proposes increasing the FDI cap for the insurance sector from 74% to 100%.
 
She reassured that protective measures are being implemented to ensure that citizens' premium payments for insurance remain within the country.
 
The MCGSMSME scheme facilitates collateral-free loans for MSMEs, allowing them to secure loans of up to Rs100 crore for the purchase of plant, machinery, or equipment.
 
Under the scheme, the National Credit Guarantee Trustee Company Ltd (NCGTC) will provide 60% guarantee coverage to member lending institutions (MLIs) for credit facilities of up to Rs100 crore sanctioned to eligible MSMEs for equipment and machinery purchases.
 
The initiative is expected to enhance credit availability for MSMEs and provide a significant boost to India's manufacturing sector.
 
According to the scheme's provisions, borrowers must be MSMEs with a valid Udyam Registration Number. The guaranteed loan amount cannot exceed Rs100 crore, while the total project cost may be higher. Additionally, the minimum cost of equipment or machinery must constitute at least 75% of the project cost.
 
During the post-Budget interaction programme with stakeholders, FM Sitharaman and minister of state for finance Pankaj Chaudhary also handed over keys to homebuyers who have benefitted from the SWAMIH (special window for affordable and mid-income housing) fund.
 
As of 24 January 2025, the SWAMIH Fund has successfully delivered over 50,000 homes, with a commitment to delivering an additional 20,000 homes annually for the next three years.
 
As announced in the Union Budget 2025-26, SWAMIH Fund 2 will be established as a blended finance facility with contributions from the government, banks and private investors.
 
This fund, amounting to Rs15,000 crore, aims to facilitate the swift completion of an additional 100,000 housing units.
Comments
parimalshah1
10 months ago
Brace for rising NPAs.
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