Finance Ministry Extends CGSMFI-2.0 Till August 31, 2026 and Raises Loan Limit to ₹1,000 Crore

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. 

Scheme Validity Extended till August 2026 

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). 

Maximum Loan Limit Raised To ₹1,000 Crore 

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. 

Loans Worth ₹770 Crore Sanctioned 

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. 

Interest Rate and Lending Conditions 

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. 

Read More: Government Collects Over ₹2.5 Lakh Crore in Dividends from Listed PSUs Over 3 Fiscal Years! 

Conclusion 

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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