NCGTC Boosts Credit Guarantee Scheme; Large MFIs Get ₹1,000 Crore Loan Limit

The National Credit Guarantee Trustee Company Ltd (NCGTC) has enhanced the maximum loan amount eligible under the Credit Guarantee Scheme for Microfinance Institutions 2.0 (CGSMFI 2.0) for large microfinance institutions, as per news reports.  

The revision comes after industry participants expressed concerns that the earlier threshold was insufficient to meet funding requirements of larger lenders. 

The move is expected to encourage greater utilisation of the scheme and support credit availability across the microfinance ecosystem. 

Loan Eligibility Cap Increased for Large Institutions 

Under the revised framework, microfinance institutions with assets under management (AUM) of ₹2,000 crore or more can now access guaranteed loans of up to ₹1,000 crore. The earlier limit stood at ₹300 crore. 

The enhanced ceiling will remain subject to a maximum of 20% of the institution’s AUM. Industry participants had argued that the previous cap restricted the effectiveness of the guarantee programme for larger borrowers, prompting the latest revision. 

Scheme Designed to Improve Credit Availability 

CGSMFI 2.0 was introduced in March 2026 to provide credit guarantees on loans extended by banks and financial institutions to eligible MFIs for onward lending to small borrowers. The programme has an overall guarantee corpus covering loans of up to ₹20,000 crore. 

The initiative was launched at a time when funding to the microfinance sector had weakened significantly.  

Lending from banks to MFIs reportedly declined sharply over the last 2 years, increasing the need for measures aimed at restoring lender confidence and improving liquidity availability. 

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Conclusion 

The increase in the guarantee-backed loan limit to ₹1,000 crore marks a significant modification to CGSMFI 2.0 and is expected to improve participation from larger microfinance institutions. The revision could help accelerate credit deployment under the scheme while supporting liquidity and funding access across the microfinance sector. 

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