Credit Guarantee Scheme for Microfinance Institutions-2.0

Credit Guarantee Scheme for Microfinance Institutions-2.0 Latest News

Recently, the Government of India has approved extension in validity of the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) upto 31.8.2026. 

About Credit Guarantee Scheme for Microfinance Institutions-2.0

• It was launched in 2026.
• It aims to provide guarantee cover to Banks/ FIs through National Credit Guarantee Trustee Company Limited (NCGTC).
• It provides guarantee against expected losses on the financial assistance extended by them to Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) and MFIs for on lending to small borrowers.
• The Government of India has also approved an increase in maximum loan amount capped to Large Sized NBFC-MFIs/MFIs from ₹300 crores to ₹1000 crores under the overall ceiling of 20% of Assets under Management (AUM).

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Features of the Scheme

• Eligible borrowers: Existing or new small borrowers within the regulatory definition of micro finance as prescribed by RBI from time to time.
• Guarantee coverage: 80% of amount in default for small, 75% for medium and 70% for large NBFC-MFIs/ MFIs.
• Guarantee Fee: 0.50% p.a., on sanctioned amount (1st year) & outstanding amount (thereafter).

What is Microfinance?

• It refers to the provision of small-scale financial services, including loans, savings, and insurance, to individuals and small businesses that lack access to traditional banking services. 

Source: PIB