Q. What is the name of the newly launched scheme that provides collateral-free loans to MSMEs?
Answer: Mutual Credit Guarantee Scheme
Notes: The Union government launched the ‘Mutual Credit Guarantee Scheme for MSMEs’ as announced in the Union Budget 2025-26. The scheme provides collateral-free loans up to ₹100 crore for purchasing plant, machinery, or equipment. The National Credit Guarantee Trustee Company Ltd (NCGTC) offers 60% guarantee coverage to lending institutions. Borrowers must be MSMEs with a valid Udyam Registration Number. The guaranteed loan amount is capped at ₹100 crore, though the total project cost can be higher. At least 75% of the project cost must be used for equipment or machinery purchase.

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