Lok Sabha Question No. 2485 (UNSTARRED), answered on 2025-12-15
Subject: Mutual Credit Guarantee Scheme for MSMEs
Ministry: FINANCE
Asked by: Shri Dushyant Singh

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

## LOK SABHA UNSTARRED QUESTION NO. 2485

ANSWERED ON MONDAY, 15 th  DECEMBER, 2025/ 24 AGRAHAYANA 1947 (SAKA)

## Mutual Credit Guarantee Scheme for MSMEs

## 2485. SHRI DUSHYANT SINGH

Will the Minister of FINANCE be pleased to state:

(a)  the  eligibility  criteria  and  implementation  framework  of  the  Mutual  Credit  Guarantee Scheme  for  MSMEs  along  with  the  manner  in  which  the  scheme  is  expected  to  enhance financial inclusion and expand credit access for small businesses;

(b) the safeguards instituted to prevent misuse, fraud or irregular claims under the said scheme; (c)  whether  any  independent  audit  or  oversight  mechanisms  have  been  established  by  the Government to ensure transparency and accountability for the said Scheme, if so, the details thereof; and

(d) the details of the specific simplifications being introduced in the new Income Tax Act to reduce compliance burdens for small businesses and individual taxpayers and the manner in which  these  measures  align  with  the  broader  objectives  of  tax  reform  and  ease  of  doing business?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI 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.

The eligibility criteria for borrowers under MCGS-MSME is as below:

- i. It should be an MSME with valid Udyam Registration Number;
- ii. It should not be a non-performing asset (NPA) with any lender;
- iii. Minimum cost of equipment /machinery is 75% of project cost.

The Scheme is being implemented by NCGTC, a wholly owned company of Department of Financial Services, Ministry of Finance, Government of India. The MLI shall sanction loans to eligible borrowers and then submit details of the loan account on the portal of NCGTC along with payment of fees, whereupon the MLI shall get a confirmation of loan being guaranteed under the Scheme.

(b) and (c) A portal has been developed by NCGTC to ensure certain basic validations and the lenders furnish data in respect of borrowers meeting these validations as also ledger account, which shall be checked/ verified by NCGTC at the time of claim settlement through makerchecker concept.  Further,  the  Fund  is  subject  to audit  by  an  independent firm  of  Statutory Auditors appointed by the Comptroller and Auditor General (CAG) of India.

(d) A time bound comprehensive review of the Income-tax Act, 1961 was undertaken with emphasis on making the Act simple, lucid and easy to comprehend, to ensure accessibility to all taxpayers, reduce litigations, and remove ambiguities. Various measures pertaining to direct taxes  undertaken  recently  to  reduce  the  compliance  burden  for  smaller  businesses  and individual tax payers in the Income-tax Act 1961 are also included in the Income-tax Act 2025. These measures are as follows:

- i. Provisions for presumptive taxation for businesses under Section 58 of the Income-tax Act, 2025.
- ii. Provisions for tax audit for businesses under Section 63 of the Income-tax Act, 2025.
- iii. Provisions for reduction in compliance burden by omission of tax collected at source (TCS) on sale of specified goods under Section 206C of the Income-tax Act, 2025.
- iv. Rationalization of Tax Deducted at Source (TDS)/Tax Collected at Source (TCS) rates.
- v. Extension of timeline for tax benefits to start-ups under Section 140 of the Income-tax Act, 2025.
- vi. Provisions for allowing certain deductions only on actual payment to micro and small enterprises under Section 140 of the Income- tax Act, 2025.

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