Government Considers New Credit Guarantee Scheme Amid West Asia Crisis

The government is mulling a Rs 2.5 lakh crore credit guarantee scheme to aid MSMEs hit by the West Asia crisis. The initiative would cover 90% of loans up to Rs 100 crore, managed by NCGTC, similar to the successful ECLGS during COVID-19. Additional measures include excise duty reductions.

The Indian government is contemplating a substantial Rs 2.5 lakh crore credit guarantee scheme aimed at supporting businesses, particularly MSMEs, impacted by the West Asia conflict, according to sources.

The initiative proposes a 90 percent credit guarantee on loans up to Rs 100 crore, aiming to safeguard lenders in case of defaults by borrowers during the ongoing US-Iran conflict. This guarantee would be managed by the National Credit Guarantee Trustee Company (NCGTC), a government-owned entity.

Previously, the government had announced the emergency credit line guarantee scheme (ECLGS) during the COVID-19 pandemic, which proved to be highly successful, assisting businesses across various sectors. Additional relief measures include reductions in excise duty on petrol, diesel, and exemptions for critical petrochemical products to mitigate consumer hardship amid global volatility.

(With inputs from agencies.)