Business EconomyPosted at: Jun 10 2026 5:56PM


Govt extends CGSMFI-2.0, enhances loan limit for large NBFC-MFIs

New Delhi, June 10 (UNI): The government has approved an extension in the validity of the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) up to August (31.8.2026) or till guarantees for an amount of Rs 20,000 crore are issued, whichever is earlier, the Finance Ministry statement said here on Wednesday.
In addition to this, the government also approved an increase in the maximum loan amount capped to large-sized NBFC-MFIs/MFIs from Rs 300-1000 crores under the overall ceiling of 20 percent of Asset Under Management (AUM).
According to the ministry, this step will lead to an extension in validity and increase in the maximum amount capped to large-sized NBFC-MFI/MFIs for better utilisation and facilitate increased flow to the MFI sector.
Under this scheme, eligible borrowers are both existing and new small borrowers within the regulatory definition of micro finance as prescribed by RBI from time to time. The guaranteed coverage is 80 percent of the amount in default for small, 75 percent for medium and 70 percent for large NBFC-MFI/MFIs.
A guaranteed fee of 0.50 percent per annum (PA) is charged on the sanctioned amount during the first year and on the outstanding amount in subsequent years.
The interest rate on loans extended by Member Lending Institutions (MLIs) to NBFC-MFIs or MFIs is capped at the External Benchmark Lending Rate (EBLR) or Marginal Cost of Funds-based Lending Rate (MCLR) plus 2 per cent per annum.
Further, while on-lending to small borrowers, MFIs and NBFC-MFIs are required to keep their interest rates at least 1 percentage point below their average lending rate during the preceding six months.
The CGSMFI-2.0 was launched in March this year to provide guarantee cover to Banks/ FIs through National Credit Guarantee Trustee Company Limited (NCGTC) 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.
As on date, loans totalling Rs 770 crore have been sanctioned under the scheme, the statement added.
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Tags: #Govt extends CGSMFI-2.0# enhances loan limit for large NBFC-MFIs
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