New Delhi: The Central Government has extended the validity of the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) till August 31, 2026, or until guarantees worth ₹20,000 crore are issued, whichever comes earlier.
The government has also increased the maximum loan limit for large NBFC-MFIs and MFIs under the scheme from ₹300 crore to ₹1,000 crore, subject to an overall cap of 20% of their Assets Under Management (AUM).
The move is expected to improve utilisation of the scheme and boost credit flow to the microfinance sector, particularly for institutions providing loans to small borrowers.
Launched on March 20, 2026, the scheme provides credit guarantee support through the National Credit Guarantee Trustee Company Ltd. (NCGTC) to banks and financial institutions lending to NBFC-MFIs and microfinance institutions. These institutions, in turn, provide loans to low-income and small borrowers.
According to official data, loans worth ₹770 crore have already been sanctioned under the scheme.
Under CGSMFI-2.0, the government offers guarantee coverage of 80% for small MFIs, 75% for medium-sized MFIs, and 70% for large MFIs against defaulted loan amounts. The guarantee fee has been fixed at 0.5% per annum.
The scheme also places limits on lending rates. Loans provided by banks and financial institutions to MFIs are capped at EBLR or MCLR plus 2%, while MFIs must lend to borrowers at rates at least 1% lower than their average lending rate over the previous six months.
Officials said the extension and enhanced loan ceiling would strengthen the microfinance ecosystem and improve access to credit for economically weaker sections, particularly in rural and semi-urban areas.
