Context:
Government approves Mutual Credit Guarantee Scheme for MSME Manufacturing Sector
Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME):
- Aim: Provide 60% guarantee coverage by National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions (MLIs).
- MLIs: Financial Institutions such as Commercial Banks and NBFCs registered with NCGTC under the scheme.
- Eligible Borrowers: MSMEs with a valid Udyam Registration Number.
- Loan Coverage: Up to ₹100 crore per MSME for purchasing Plant and Machinery/Equipment.
- Project Cost: Can exceed ₹100 crore, but at least 75% of the cost must be for machinery/equipment.
- Repayment Terms:
- Loans up to ₹50 crore: Repayment period of up to 8 years (including 2 years moratorium on principal).
- Loans above ₹50 crore: Longer repayment and moratorium can be considered.
- Scheme Duration: 4 years from the issue of operational guidelines or until a cumulative guarantee of ₹7 lakh crore is issued.
Related schemes to promote MSMEs:
- Emergency Credit Line Guarantee Scheme (ECLGS) – to mitigate the economic distress faced by MSMEs after COVID-19.
- Udyam Assist Platform (UAP) – to bring the Informal Micro Enterprises (IMEs) under the formal ambit for Priority Sector Lending (PSL).
- CHAMPIONS 2.0 Portal – single-window grievance redressal portal for MSME.
- MSME Self-Reliant India Fund – to provide support for MSMEs across the country through equity infusion
Source: PIB
Previous Year Question
Consider the following statements with reference to India:
1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the ‘medium enterprises’ are those with investments in plant and machinery between Rs. 15 crores and Rs. 25 crores.
2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector.
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2023 Prelims]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (b)
Explanation:
Medium Enterprise: An enterprise where the investment in plant and machinery or equipment does not exceed Rs. 50 crores, and turnover does not exceed Rs. 250 crores. Hence, Statement 1 is not correct.
The areas identified under Priority Sector Lending (PSL) in India by the Reserve Bank of India include agriculture, micro, small and medium enterprises (MSMEs), export credit, education, housing, social infrastructure, renewable energy, and weaker sections of society. Hence, Statement 2 is correct.