Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME)

Ø  It should not be an NPA with any lender.

Ø  Minimum cost of equipment /machinery should be 75% of Project cost.

Ø  Term Loan amount guaranteed up to Rs.100 crores, Project Cost could be higher amount also.

Ø  In case loan amount exceeds Rs.100 crores, two different repayment schedules should be drawn (one for Rs.100 crore loan and the second for balance amount of loan), repayment schedule shall be pro-rata and receipts/repayments should be distributed proportionately.

Ø  Minimum cost of equipment /machinery should be 75% of project cost.

Ø  Guarantee Cover – 60% of Amount in Default

Ø  For loans up to Rs. 50.00 Crore: Maximum repayment period up to 8 years, with moratorium period up to 2 years for principal instalments is permitted under the scheme.

Ø  For loans above Rs. 50.00 Crore: Higher repayment and moratorium period for principal instalments can be considered by Sanctioning Authority in compliance to prevailing credit policy norms.

Ø  5% of the loan amount should be deposited by borrower with NCGTC, as upfront contribution at the time of application for guarantee cover.

Ø  For the next 3 years, AGF shall be 1.5% p.a. of loan outstanding as on March 31 of previous year. Thereafter, Guarantee Fee shall be 1% p.a. of loan outstanding as on March 31 of previous year.

Ø  Guarantee Fee from second year shall be payable on disbursements made in the intervening months for the period remaining in that year.

Ø  The Guarantee Fee shall become payable within 30 days of close of year for the outstanding amount as on the close of the Financial Year and 30 days within date of disbursement for any subsequent disbursements.

Ø  For the purpose of arrival of 5% upfront contribution for guarantee coverage during the first year, loan sanctioned amount net of collateral security value, to be considered for computation.

Ø  With regard to subsequent years guarantee fee shall be considered on outstanding amount after adjusting net of value of collateral security being offered.

Ø  Claim Payout Cap in a year – The entire eligible guaranteed amount shall be payable to an MLI. However, during a year, only twice the amount of guarantee fee paid and recoveries deposited (out of earlier claims paid) by an MLI during previous year shall be eligible for payout.

Ø  In case a borrower was earlier availed support under the Scheme and has been regular in payment of dues and approaches for support again, the upfront contribution up to the earlier value of loan amount shall be waived i.e. upfront contribution shall be taken only on the loan amount exceeding the earlier loan amount.

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