The Ministry of Finance has extended the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) until August 31, 2026, or until Rs 20,000 crore in guarantees are issued. The scheme's maximum loan amount for large NBFC-MFIs and MFIs has also been increased.
This extension and increased loan limit are expected to bolster credit availability for microfinance institutions, potentially enabling them to extend more loans to small borrowers and support financial inclusion initiatives.
The Ministry of Finance has extended the validity of the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) until August 31, 2026, or until guarantees totaling Rs 20,000 crore are issued, whichever occurs first. This extension also includes an increase in the maximum loan amount for large Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) and MFIs from Rs 300 crore to Rs 1,000 crore, within an overall ceiling of 20% of Assets under Management (AUM). The government anticipates that these changes will lead to better utilization of the scheme and stimulate greater credit flow to the microfinance sector. The CGSMFI-2.0 was initially introduced in March to offer guarantee coverage to banks and financial institutions against potential losses from financial assistance provided to NBFC-MFIs and MFIs for on-lending to small borrowers. As of June 10, loans amounting to Rs 770 crore had been sanctioned under the scheme.