Micro, Small and Medium Enterprises (MSMEs) form the backbone of India’s manufacturing and growth. To support their expansion and boost investment, the Government of India has introduced the Mutual Credit Guarantee Scheme (MCGS) — a high-impact initiative that gives businesses access to loans up to ₹100 crore without the need for traditional collateral. This scheme is transforming MSME financing by reducing risk for lenders and creating new opportunities for entrepreneurs.
What Is the Mutual Credit Guarantee Scheme?
The Mutual Credit Guarantee Scheme is an advanced credit-support mechanism designed to help eligible MSMEs secure large-value loans for business expansion, equipment purchase and capacity building. Managed by the National Credit Guarantee Trustee Company (NCGTC), the scheme offers 60% guarantee cover to banks and financial institutions, encouraging them to lend more confidently to MSMEs without demanding heavy collateral.
Who Is Eligible for This Scheme?
To benefit from the MCGS, a business must be registered as an MSME on the Udyam Portal. The enterprise should also maintain a clean repayment history and must not be categorized as a Non-Performing Asset (NPA). The loan must primarily be used for purchasing machinery, equipment or for scaling production capacity. The scheme is ideal for manufacturing units that need high-value funding to modernize operations.
How MSMEs Can Get a Loan Up to ₹100 Crore Without Collateral
Under this scheme, banks and NBFCs registered as Member Lending Institutions (MLIs) can offer MSMEs loans up to ₹100 crore. Since 60% of the loan is guaranteed by NCGTC, lenders face lower risk, making it easier to approve high-value credit without mortgage or property collateral. MSMEs simply need to submit their business plan, machinery purchase details and financial documents to apply through an eligible lender.
Key Benefits of the Mutual Credit Guarantee Scheme
The MCGS brings several advantages for growing businesses. It enables MSMEs to invest in modern machinery without worrying about arranging collateral. The reduced lender risk means quicker loan approvals and better interest rates. The scheme encourages large-scale expansion, helping businesses improve production, generate employment and compete globally under the “Make in India” mission.
What MSMEs Should Keep in Mind Before Applying
While the scheme removes collateral requirements, MSMEs must ensure strong financial discipline. Loans sanctioned under this scheme must be used strictly for approved purposes such as machinery and equipment purchase. Maintaining a good credit history and regular repayment is essential to avoid future restrictions. MSMEs should also confirm whether their preferred bank or NBFC is listed as a Member Lending Institution under the scheme.
Conclusion: The Mutual Credit Guarantee Scheme is a breakthrough initiative that provides MSMEs with easier access to large-scale funding of up to ₹100 crore without collateral. This scheme strengthens India’s manufacturing sector and empowers small and medium enterprises to grow confidently. By leveraging this scheme, MSMEs can unlock new opportunities, boost production and scale their business to the next level.
Disclaimer: This article is for general information only. Eligibility rules, loan conditions and scheme details may vary by financial institution. Always refer to official guidelines on the Ministry of Finance or NCGTC website before applying.
