BTL 889 - Micro Credit Card (MCC) - CGTMSE Guarantee Cover

 

The Banking Tutor’s Lessons

BTL 889                                                                                15-04-2026

Micro Credit Card (MCC) - CGTMSE Guarantee Cover 

In order to promote financial inclusion and to address short-term liquidity needs of Micro Enterprises CGTMSE introduced a special provision for extending guarantee coverage without insisting on primary security to lending institutions providing Micro Credit Card (MCC) to Micro Enterprises, for financing their working capital requirements/business related expenditure.

Key Features of the Special Provision:

1. Eligible beneficiary: All Udyam registered Micro Enterprises that have short term and adhoc Working Capital finance requirements.

2. Eligible MLIs: RBl-regulated Lending Institutions/ Non-Banking Financial Companies (NBFCs) issuing Credit Cards (MECards) under Model Scheme for Credit Cards for Micro Enterprises.

3. Maximum limit of Credit Card: 5 lakh per borrower.

4. Extent of guarantee coverage: 75% of amount in default or Credit Card limit, whichever is lower, irrespective of the category of the borrower.

5. Eligibility for guarantee coverage: Such issued cards having reference number from Jan Samarth Portal (JSP) shall be eligible for guarantee coverage.

6. Primary Security: Not mandatory.

7. Annual guarantee fee rate: 0.55% on the Credit Card limit irrespective of the category of the borrower. No Risk Premium will be levied as all beneficiaries will be Micro Enterprises.

8. Lock-in period: 9 months from the guarantee start date.

9. Tenure of the Scheme: 3 years from the date of launch or till 10 lakh Credit Cards are issued, whichever is earlier.

10. Responsibility for credit appraisal, account classification, and monitoring of asset quality, including assessment of SMA status at the time of sanction, would rest with the Lending Institutions/ Credit Card Issuers including compliance with regulatory guidelines.

11. All guidelines with respect to submission of application for coverage, timelines, payment of fee process, NPA marking, guarantee invocation, claim settlement, recoveries, etc., will be as per the existing guidelines of Credit Guarantee Scheme - I of CGTMSE.

Sekhar Pariti

+91 9440641014

(Source: CGTMSE’s Circular dated 18-03-2026)