The Finance Ministry has extended the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) by two months till August 31 or until guarantees worth ₹20,000 crore are issued, whichever is earlier.
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The Finance Ministry on Wednesday extended the validity of the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) by two more months to August 31, or until guarantees amounting to ₹20,000 crore are issued, whichever is earlier.
It has also been decided to increase the maximum loan amount cap for Large-Sized NBFC-MFIs/MFIs to ₹1,000 crore from ₹300 crore, subject to an overall ceiling of 20% of Assets under Management (AUM). “Extension in validity and increase in maximum loan amount capped to Large Sized NBFC-MFIs/MFIs is expected to result in better utilisation of the scheme and facilitate increased credit flow to the MFI sector,” a statement issued by the Finance Ministry said.
Scheme aims to boost credit flow to microfinance sector
Centre introduced the CGSMFI-2.0 scheme on March 20, 2026. The scheme aims to provide guarantee cover to Banks/FIs through the National Credit Guarantee Trustee Company Limited (NCGTC) against expected losses arising from financial assistance extended by them to Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) and MFIs for lending to small borrowers. As of date, loans totalling ₹770 crore have been sanctioned under the scheme.
Under the scheme, existing or new small borrowers within the regulatory definition of micro finance as prescribed by the RBI from time to time are eligible. Guarantee coverage means 80 per cent of the amount in default for small, 75 per cent for medium, and 70 per cent for large NBFC-MFIs/MFIs. Guarantee fee will be 0.5 per cent (per annum) on the sanctioned amount (1st year) & outstanding amount (thereafter).
Interest rate norms for lending under scheme
Interest rate is apped at EBLR or MCLR plus 2 per cent on loans by MLIs to NBFC-MFIs or MFIs. While on-lending to small borrowers, these MFIs/NBFC-MFIs shall cap the interest rate at 1 per cent below the average lending rate over the past 6 months.
Published on June 10, 2026
