Union Cabinet Extends CGFMU Until March 31, 2031; PM Mudra Yojana Loans Worth ₹12.6 Lakh Crore Facilitated

On November 11, 2026, the Union Cabinet chaired by Prime Minister Narendra Modi approved the continuation of the Credit Guarantee Fund for Micro Units (CGFMU) for 5 years until March 31, 2031, as per a PIB report.  

The approval includes a corpus of ₹5,000 crore to facilitate Pradhan Mantri Mudra Yojana loans amounting to ₹12.6 lakh crore.  

Since the launch of the PM Mudra Scheme, lending institutions have sanctioned more than 60.36 crore loans amounting to ₹43.34 lakh crore as on September 2026. 

Extension of Credit Guarantee Fund for Micro Units 

The Credit Guarantee Fund for Micro Units, launched in January 2016, provides credit guarantee coverage to lending institutions through the National Credit Guarantee Trustee Company Limited against default risk.  

The scheme applies to all loans extended under the Pradhan Mantri Mudra Yojana during the 16th Finance Commission Cycle from FY 2026 to 2027 to FY 2030 to 2031.  

This extension enables collateral free loans of ₹12.6 lakh crore over the next 5 years for entrepreneurs who previously could not access loans from the formal banking system. 

Eligible Credit Facilities and Guarantee Coverage 

The fund covers loans extended to eligible micro enterprises under the Pradhan Mantri Mudra Yojana up to ₹20 lakh.  

It also covers overdrafts of up to ₹10,000 provided by banks under Pradhan Mantri Jan Dhan Yojana accounts, alongside loans granted to Self Help Groups with portfolios between ₹10 lakh and ₹20 lakh.  

Guarantee coverage links to the disbursement amount for working capital limits and the outstanding amount for term loan accounts to reflect actual risk exposure. 

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Revised Guarantee Fee Structure 

The government reduced the annual guarantee fee from 1% per annum to 0.75% per annum. Self Help Groups face no fee changes and continue paying 0.25% for the 1st year and 0.50% in subsequent years. 

Conclusion 

The Union Cabinet approved a ₹5,000 crore corpus for the Credit Guarantee Fund for Micro Units for 5 years until March 31, 2031, facilitating ₹12.6 lakh crore in loans while reducing the guarantee fee from 1% to 0.75%. 

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