The govt. has introduced amendments to the Mutual Credit Guarantee Scheme for MSMEs

Current Context: The Government of India overhauled the Mutual Credit Guarantee Scheme (MCGS‑MSME) in March 2026, following the roadmap of Budget 2025‑26.

• The changes make the scheme more flexible, inclusive, and supportive for service sector MSMEs and exporters.
• Highlights
• Expanded Eligibility: Service sector MSMEs now included (earlier only manufacturing).
• Machinery Cost Rule Relaxed: Minimum share reduced from 75% → 60%, allowing funds for installation & civil works.
• Refundable Contribution: 5% upfront contribution now refundable — 1% returned annually from 4th year if loan is performing.
• Exporter Incentives: 75% guarantee cover on loans up to ₹20 crore; waived fee in 1st year, capped at 0.50% thereafter; upfront contribution fixed at 2% (max ₹40 lakh), partially refundable.
• Extended Tenure: Guarantee period fixed at 10 years, aligning with machinery lifespan.

Question:

Q.1 Under the Mutual Credit Guarantee Scheme (MCGS-MSME), the minimum machinery cost requirement has been revised to:
a) 75%
b) 70%
c) 60%
d) 50%

Answer: c) Minimum share reduced from 75% → 60%, allowing funds for installation & civil works.