Lok Sabha Question No. 1326 (UNSTARRED), answered on 2025-07-28
Subject: Mutual Credit Guarantee Scheme for MSMEs
Ministry: FINANCE
Asked by: Thiru Arun Nehru

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO.1326

ANSWERED ON MONDAY, 28 th  JULY, 2025/ 6 SRAVANA, 1947 (SAKA)

## MUTUAL CREDIT GUARANTEE SCHEME FOR MSMES

## 1326. THIRU ARUN NEHRU:

Will the Minister of FINANCE be pleased to state:

(a) the details of the funds allocated, sanctioned, disbursed and expended under the Mutual Credit Guarantee Scheme for MSMEs since its inception, State-wise and year-wise;

- (b) the details of the beneficiaries under the Scheme since its inception, State-wise and yearwise;
- (c) the details of the awareness or outreach campaigns conducted to familiarise MSMEs, trade bodies and State officials about the concept and benefits of the scheme;
- (d)  the  steps  taken  by  the  Government  to  build  institutional  capacity  for  facilitating  mutual guarantee collectives, including training, handholding and awareness generation;
- (e) whether any special provision is there to promote women-only mutual guarantee groups or collectives led by youth entrepreneurs and if so, the details thereof; and
- (f) whether the Government is considering to institutionalize mutual credit guarantee systems at the national level by statutory framework or regulatory guidelines and if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SH. PANKAJ CHAUDHARY)

- (a)  Mutual  Credit  Guarantee  Scheme  for  MSMEs  (MCGS-  MSME)  has  been  launched  for providing  60%  guarantee  coverage  by  National  Credit  Guarantee  Trustee  Company  Limited (NCGTC)  to  Member  Lending  Institutions  (MLIs)  for  credit  facility  upto  Rs.  100  crore sanctioned to eligible Micro, Small and Medium Enterprises (MSMEs) under MCGS-MSME for purchase of equipment / machinery.

Under MCGS-MSME which is a credit guarantee scheme, the Government of India, through NCGTC, issues guarantees for loans extended by Member Lending Institutions (MLIs). Rs. 500 crore  has  been  approved  as  Government  contribution  to  the  corpus  of  MCGS-MSME.  The

Scheme has been launched recently and no NPA claims have been reported till date under the Scheme. Hence, no fund has been released to the NCGTC by the Government of India till date.

(b)  As  on  15.7.2025,  the  State-wise  details  of  guarantees  extended  under  the  Scheme  are  as under:

## (Amount in ₹ crore)

| Mutual Credit Guarantee Scheme for MSMEs   | Mutual Credit Guarantee Scheme for MSMEs   | Mutual Credit Guarantee Scheme for MSMEs   |
|--------------------------------------------|--------------------------------------------|--------------------------------------------|
| FY 2025-26                                 | FY 2025-26                                 | FY 2025-26                                 |
| Name of State                              | Number of Guarantees Issued                | Sanctioned Amount                          |
| Gujarat                                    | 1                                          | 10.00                                      |
| Haryana                                    | 1                                          | 18.00                                      |
| Karnataka                                  | 2                                          | 22.75                                      |
| Madhya Pradesh                             | 1                                          | 0.11                                       |
| Maharashtra                                | 4                                          | 41.77                                      |
| Tamil Nadu                                 | 2                                          | 20.81                                      |
| Grand Total                                | 11                                         | 113.44                                     |

Source: NCGTC

- (c)  Various  meetings  have  been  organised  with  Banks,  Non-Banking  Financial  Companies (NBFCs), All India Financial Institutions (AIFIs), Indian Banks' Association (IBA) and MSME associations to create awareness about the Scheme. A meeting was organised by the IBA in April 2025, wherein details of the Scheme were shared with the lenders for enabling support to the MSMEs. Further, a conference was organised by the IBA in July, 2025 wherein banks, NBFCs and MSME associations were encouraged to disseminate the scheme information amongst the borrowers.
- (d)  The  loans  involved  under  the  Scheme  would  be  normal  projects  of  MSMEs,  which  are otherwise also being financed by Banks/FIS/NBFCs. Hence, institutional capacity for lending is already available amongst these lenders. The Scheme reduces the risk of the lenders by providing guarantee cover and hence, no specific training or handholding would be required for lending under  the  Scheme.  However,  meetings  are  being  organised  through  the  IBA/  Industry Associations with the lenders for awareness generation.
- (e) All existing and new MSMEs with valid Udyam Registration Number will be eligible under the scheme without any differentiation for a particular group of borrowers.
- (f) No such proposal is under consideration.

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