Key Highlights
- Scheme validity prolonged to 31 August 2026.
- Maximum funding ceiling for large NBFC‑MFIs/MFIs lifted from ₹300 crore to ₹1,000 crore, subject to a 20% AUM cap.
- Guarantee coverage ranges from 70% to 80% of default losses depending on institution size.
- Annual guarantee fee fixed at 0.50%.
- Targeted to mobilise up to ₹20,000 crore of credit for underserved borrowers.
Detailed Insights
The Government of India has officially extended the Credit Guarantee Scheme for Micro‑finance Institutions‑2.0 (CGSMFI‑2.0) until 31 August 2026. The extension seeks to sustain the scheme’s momentum in delivering risk‑mitigated financing to micro‑finance entities that serve low‑income households, women entrepreneurs, and micro‑enterprises.
In addition to the time‑extension, the ceiling for the aggregate loan exposure permissible for large NBFC‑MFIs and MFIs has been increased three‑fold—from ₹300 crore to ₹1,000 crore. This increase is bounded by an overall limit of 20 percent of the institution’s Assets‑under‑Management (AUM), ensuring proportional risk exposure.
Operationally, the scheme operates through the National Credit Guarantee Trustee Company Limited (NCGTC). It guarantees up to 80 percent of losses for small‑scale MFIs, roughly 75 percent for medium‑size players, and 70 percent for large entities. The fee charged to participants is a flat 0.50 percent per annum on the guaranteed amount.
Since its inauguration on 20 March 2026, the programme has already sanctioned loans worth ₹770 crore. By cushioning lenders against default risk, CGSMFI‑2.0 is expected to accelerate credit flow, enhance financial inclusion, and help achieve the overarching target of channelising ₹20,000 crore to the micro‑finance ecosystem.
Key Concepts
- NBFC‑MFI: Non‑bank financial company engaged in micro‑finance activities, providing small‑ticket loans to underserved borrowers.
- Assets‑under‑Management (AUM): The total market value of assets that a financial institution manages on behalf of its clients.
- Guarantee Coverage: The proportion of a borrower’s default loss that the scheme agrees to reimburse the lender for, varying by institution size.
- National Credit Guarantee Trustee Company (NCGTC): The trustee entity that administers guarantee disbursements and fee collection under CGSMFI‑2.0.