Overview
- The Finance Ministry on Wednesday, June 10 approved an extension of CGSMFI-2.0 to August 31, 2026 or until guarantees totaling Rs 20,000 crore are issued, whichever comes first.
- The government raised the single-loan cap for large NBFC-MFIs and MFIs from Rs 300 crore to Rs 1,000 crore, subject to a ceiling of 20 percent of an MFI’s assets under management.
- The scheme is run by the National Credit Guarantee Trustee Company and guarantees loans made by banks and financial institutions to MFIs for on-lending to small borrowers.
- Key scheme terms include staggered coverage of defaults (80% for small, 75% for medium, 70% for large MFIs), a 0.50% per annum guarantee fee, and interest caps to lower MFI funding costs.
- Uptake remains modest with Rs 770 crore sanctioned so far, so the near-term impact will depend on faster operational use of guarantees and how lenders and MFIs respond to the pricing and lending limits.