Bank Guarantee Charges Reimbursement Scheme

What is the Bank Guarantee Charges Reimbursement Scheme?

The Bank Guarantee Charges Reimbursement Scheme is a support measure under the Ministry of Micro, Small and Medium Enterprises (MSME) that reduces the cost a micro or small enterprise (MSE) bears when it has to provide a bank guarantee to avail financial assistance. The scheme is operationalised through the National Small Industries Corporation (NSIC), a public sector enterprise under the Ministry of MSME that runs several credit and raw-material support facilities for small businesses.

When a small enterprise takes an NSIC facility, for example, Raw Material Assistance against Bank Guarantee — it usually has to furnish a bank guarantee as security. Banks charge a fee, often calculated annually as a percentage of the guaranteed amount, to issue that guarantee. For a small enterprise working on thin margins, this bank guarantee charge is a real cost that adds to the price of credit. The Bank Guarantee Charges Reimbursement Scheme addresses exactly this cost by reimbursing the guarantee charges an eligible MSE has paid, subject to NSIC's norms.

The scheme is best understood as a cost-reduction wrapper around NSIC's core financial assistance. It does not put money in the hands of individuals. Instead, it makes the underlying facility cheaper to use, so that more micro and small enterprises can access working-capital and raw-material support without the bank guarantee cost eating into their savings.

How the benefit works

The benefit is a reimbursement, not a fresh loan or grant. The sequence is:

1. An MSE avails an NSIC facility that requires a bank guarantee as security.
2. The enterprise's bank issues the guarantee and charges a fee for it.
3. The enterprise pays that fee to the bank and keeps the receipt.
4. Under the reimbursement scheme, the enterprise claims back the bank guarantee charges through NSIC.

Because the reimbursement is tied to charges actually paid, the amount an enterprise gets back depends on the size of the guarantee and the bank's charge. The exact reimbursement rate and any cap are governed by NSIC's operational norms for the scheme, which the enterprise should confirm with the branch handling its facility. Where a specific rate or ceiling is not confirmed in writing by NSIC, an enterprise should not assume a figure.

Who is eligible for the Bank Guarantee Charges Reimbursement Scheme?

Eligible applicants:

• Micro and small enterprises registered with NSIC (and holding Udyam registration) that are availing an NSIC financial assistance facility.
• Enterprises that have furnished a bank guarantee to NSIC and paid the associated bank charges.

Not eligible / cannot apply:

• Individuals seeking a personal cash benefit cannot apply. This is an enterprise-level cost reimbursement, not a welfare transfer.
• Enterprises that have not availed any NSIC facility requiring a bank guarantee have no charges to reimburse and are therefore not eligible.
• Medium and large enterprises fall outside the micro-and-small target of the scheme.

This is the single most common point of confusion: the scheme is not a stand-alone subsidy that any business can claim. It only exists alongside an NSIC facility that required a bank guarantee.

What documents are required?

How to apply for the Bank Guarantee Charges Reimbursement Scheme

1. Approach the nearest NSIC branch office and register for the relevant financial assistance facility, such as Raw Material Assistance against Bank Guarantee, if you have not already.
2. Furnish the bank guarantee required for the facility through your bank, and pay the bank's guarantee charges, retaining the receipt.
3. Submit a reimbursement claim to NSIC with the bank guarantee document, the charge receipt and your enterprise bank account details.
4. Track the claim with the NSIC branch until the reimbursement is credited.

Help and where to confirm details

• NSIC portal: nsic.co.in lists the financial assistance facilities and branch offices.
• Nearest NSIC branch office: the correct place to confirm the current reimbursement rate, ceiling and claim format for your facility.

Because published figures for this niche scheme are limited, an enterprise should confirm the exact reimbursement terms in writing with NSIC before relying on any particular amount. This guide describes the structure and route of the scheme; the precise rate is set by NSIC's operational guidelines.