Govt extends microfinance guarantee scheme, raises loan cap to ₹1,000 cr

The government has approved the extension of the Credit Guarantee Scheme for Microfinance Institutions - 2.0 and a hike in the maximum loan limit to ₹1,000 crore.

As of date, loans totalling ₹770 crore have been sanctioned under the scheme, the Finance Ministry said in a statement.

The CGSMFI-2.0 scheme was introduced on March 20, 2026, and aims to provide guarantee cover to Banks/ FIs through National Credit Guarantee Trustee Company Limited (NCGTC) against expected losses on the financial assistance extended by them to NBFC-MFIs and MFIs for on-lending to small borrowers.

The scheme was valid till June 30, 2026 or loans up to ₹20,000 crore are guaranteed, whichever is earlier.

 

"The Government of India has approved extension in validity of the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) up to August 31, 2026, or till guarantees for an amount of ₹20,000 crore are issued, whichever is earlier," the ministry said.

The government has also approved an increase in the maximum loan amount capped to large-sized NBFC-MFIs/MFIs from ₹300 crore to ₹1,000 crore under the overall ceiling of 20 per cent of assets under management (AUM).

The extension in validity and increase in maximum loan amount capped to large-sized NBFC-MFIs/MFIs is expected to result in better utilisation of the scheme and facilitate increased credit flow to the MFI sector, the ministry added.