The Ministry of Finance has approved changes to the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0), including an extension of the scheme's validity and a higher loan limit for eligible institutions.
The changes apply to microfinance institutions (MFIs) and non-banking financial company-microfinance institutions (NBFC-MFIs) covered under the scheme.
The validity of CGSMFI-2.0 has been extended until August 31, 2026. The scheme will remain operational until that date or until guarantees amounting to ₹20,000 crore are issued, whichever occurs earlier.
CGSMFI-2.0 was introduced in March 2026 to provide guarantee cover to banks and financial institutions extending financial assistance to MFIs and NBFC-MFIs for onward lending to small borrowers.
The guarantee cover is provided through the National Credit Guarantee Trustee Company Limited (NCGTC).
The Finance Ministry has also approved an increase in the maximum loan amount available to large-sized NBFC-MFIs and MFIs under the scheme.
The limit has been raised from ₹300 crore to ₹1,000 crore, subject to an overall ceiling of 20% of assets under management (AUM).
According to the government, the changes are intended to facilitate utilisation of the scheme and support credit flow to the microfinance sector.
As of June 10, loans amounting to ₹770 crore had been sanctioned under CGSMFI-2.0.
Under the scheme, existing and new borrowers falling within the regulatory definition of microfinance borrowers are eligible.
The guarantee coverage is set at 80% of the amount in default for small institutions, 75% for medium institutions and 70% for large institutions.
The interest rate on loans provided by member lending institutions to MFIs and NBFC-MFIs is capped at EBLR plus 2% per annum or MCLR plus 2% per annum.
For lending to small borrowers, MFIs and NBFC-MFIs are required to keep interest rates at 1% below their average lending rate during the previous 6 months.
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The Finance Ministry has extended CGSMFI-2.0 until August 31, 2026 or until guarantees worth ₹20,000 crore are issued. The revised framework also increases the maximum loan limit for eligible MFIs and NBFC-MFIs from ₹300 crore to ₹1,000 crore.
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Published on: Jun 11, 2026, 12:53 PM IST
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