The Government has extended the validity of the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) till 31 August 2026, or until guarantees worth ₹20,000 crore are issued, whichever is earlier.
According to a statement by the Ministry of Finance, the government has also increased the maximum loan amount capped for large-sized NBFC-MFIs and MFIs from ₹300 crore to ₹1,000 crore under the scheme.
The higher loan cap will remain within the overall ceiling of 20% of assets under management.
The ministry said the extension in validity and increase in the maximum loan amount for large NBFC-MFIs and MFIs is expected to improve utilisation of the scheme and facilitate increased credit flow to the microfinance sector.
The Centre had introduced CGSMFI-2.0 on 20 March 2026.
The scheme aims to provide guarantee cover to banks and financial institutions through the National Credit Guarantee Trustee Company Limited (NCGTC) against expected losses on financial assistance extended to NBFC-MFIs and MFIs for on-lending to small borrowers.
Read also : MGNREGA to transition to VB-GRAMG from 1 July; Centre releases ₹95,692 crore to states, UTs ahead of rollout
According to the ministry, loans totalling ₹770 crore have been sanctioned under the scheme so far.
Under CGSMFI-2.0, eligible borrowers include existing or new small borrowers within the regulatory definition of microfinance prescribed by the Reserve Bank of India from time to time.
The scheme provides guarantee coverage of 80% of the amount in default for small NBFC-MFIs and MFIs, 75% for medium institutions and 70% for large NBFC-MFIs and MFIs.
The guarantee fee under the scheme is 0.50% per annum on the sanctioned amount in the first year and on the outstanding amount thereafter.
The interest rate on loans by member lending institutions to NBFC-MFIs or MFIs is capped at EBLR or MCLR plus 2% per annum.
For on-lending to small borrowers, MFIs and NBFC-MFIs will have to cap the interest rate at 1% below their average lending rate over the past six months.
Read also : Bristol, York and UNSW get India campus nod as foreign university approvals rise to five
