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.

How to check your application status

There is no online applicant-facing dashboard for the Bank Guarantee Charges Reimbursement Scheme, because the claim is not a standalone application but is filed and tracked through the NSIC branch handling the underlying financial assistance facility. To check where a claim stands, an enterprise should:

1. Contact the same NSIC branch office where the reimbursement claim was submitted, since NSIC does not centralise these claims on a single national tracker. Keep the claim submission date and the officer's name or the acknowledgement reference handy, if one was issued.
2. Quote the bank guarantee reference number and the underlying facility sanction number (for example, the Raw Material Assistance sanction) when following up, since the branch will look up the claim against the guarantee and facility file, not against a separate reimbursement application number.
3. Ask specifically whether the claim is under verification, awaiting the bank's charge certificate, or cleared for payment, since NSIC processes reimbursement alongside its own internal accounting for the facility, and the stage often depends on whether the bank has confirmed the charges to NSIC's satisfaction.
4. Check the enterprise's bank account for the credited amount as the practical confirmation of completion, since NSIC does not always issue a separate confirmation letter once a reimbursement is processed.
5. Escalate to the NSIC regional or zonal office if the branch does not respond within a reasonable follow-up window, particularly if the underlying facility itself is active and disbursing normally but the guarantee-charge reimbursement specifically has stalled.

Because this is a low-volume, enterprise-to-enterprise reimbursement rather than a mass citizen scheme, there is no SMS alert system, no dedicated helpline number for status queries, and no portal login for this component. The nearest NSIC branch office is the only reliable channel for status information.

Common reasons for rejection

• The enterprise has no active NSIC financial assistance facility. The reimbursement is not a stand-alone subsidy, so a claim filed without a live NSIC facility that required a bank guarantee will not be processed. Fix: confirm the facility (such as Raw Material Assistance against Bank Guarantee) is sanctioned and active with NSIC before raising a reimbursement claim.
• The bank guarantee was not furnished to NSIC, or was furnished for an unrelated purpose. If the guarantee was given to a different party or for a facility outside NSIC's own schemes, the charges on it fall outside this reimbursement. Fix: ensure the guarantee document explicitly names NSIC as the beneficiary for the specific facility availed.
• Missing or inadequate proof of the charges actually paid. A claim without a bank-issued certificate or receipt showing the exact guarantee charge deducted or billed will typically be sent back for more documentation, since NSIC reimburses actual charges paid, not an estimated figure. Fix: obtain a formal charge certificate from the issuing bank rather than relying on a passbook entry or an informal statement.
• Udyam or NSIC registration details do not match across documents. Mismatches between the enterprise name, Udyam number, or registration details on the facility sanction papers versus the bank guarantee or bank account can stall a claim during verification. Fix: keep the enterprise name and registration number identical across the Udyam certificate, the NSIC sanction letter, the bank guarantee, and the bank account used for reimbursement.
• The enterprise no longer qualifies as micro or small. Since the scheme targets micro and small enterprises specifically, a business that has grown into the medium category, or whose Udyam classification has changed, may find a fresh claim rejected even if an earlier facility was availed while it was still small. Fix: check current Udyam classification before filing a claim tied to a new guarantee.
• Claim filed too long after the charges were paid, or after the guarantee period lapsed. NSIC branches generally expect a reimbursement claim to be raised while the facility and guarantee are still on record; a claim raised well after closure of the facility can be harder to reconcile against the bank's own records. Fix: raise the reimbursement claim as soon as the bank guarantee charge receipt is available, rather than waiting until the facility is closed.
• Bank account details on the claim do not match the enterprise's registered account. A reimbursement credited to the wrong account, or a claim listing an account not linked to the enterprise's registration, is a common processing hold-up. Fix: submit the same bank account details already on record with NSIC for the facility, and update NSIC first if the account has changed.