New Delhi (India), June 10: The Government has approved an extension in the validity of the Credit Guarantee Scheme for Microfinance Institutions-2.0 up to 31st August of this year or till guarantees for an amount of 20 thousand crore rupees are issued.
The Ministry of Finance said that as of date, loans totalling 770 crore rupees have been sanctioned under the scheme.
The scheme aims to provide credit guarantee support through National Credit Guarantee Trustee Company Limited to strengthen lending to Microfinance Institutions(MFI) and facilitate increased credit flow of up to 20 thousand crore rupees to Non-Banking Financial Company-Microfinance Institutions (NBFC-MFI).
The Ministry said that the government has also approved an increase in the maximum loan amount capped to Large Sized NBFC-MFIs and MFIs from 300 crores rupees to 1000 crore rupees under the overall ceiling of 20 percent of Assets under Management.
Background
Central Government introduced CGSMFI-2.0 scheme on March 20, 2026. The scheme 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 Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) and MFIs for on lending to small borrowers.
As on date, loans totalling ₹770 crore have been sanctioned under the scheme.
The scheme is designed for existing or new small borrowers falling under the RBI’s microfinance definition. It provides guarantee coverage of 80% for small, 75% for medium, and 70% for large NBFC-MFIs/MFIs on the default amount.
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The guarantee fee is set at 0.50% per annum, calculated on the sanctioned amount in the first year and the outstanding amount thereafter.
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Loans provided by Member Lending Institutions (MLIs) to NBFC-MFIs or MFIs will have an interest rate cap of EBLR or MCLR + 2% per annum. Additionally, while lending to small borrowers, MFIs/NBFC-MFIs must keep interest rates at least 1% below their average lending rate of the previous six months.
Ends.
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