India extended the Credit Guarantee Scheme for Microfinance Institutions 2.0 until August 31 and raised the maximum loan amount limit for large NBFC-MFIs and MFIs to ₹1,000 crore from ₹300 crore, subject to a 20 percent Assets Under Management ceiling.
EXTENSION AND KEY CHANGES
The decision extends the scheme by two months beyond its previous 30 June deadline, or until guarantees of ₹20,000 crore have been issued. The announcement also increased the cap on loans eligible for the guarantee for larger non-bank finance company microfinance institutions and microfinance institutions, while maintaining a proportionality constraint tied to the institutions’ assets under management.
Launched on 20 March 2026, the scheme provides credit guarantee cover, through the National Credit Guarantee Trustee Company, to banks and financial institutions lending to NBFC-MFIs and MFIs, covering 80 percent of the amount in default for small MFIs, 75 percent for medium-sized entities and 70 percent for large NBFC-MFIs and MFIs. Loans of ₹770 crore had been sanctioned under the scheme by the time of the announcement.
UTILISATION
The Finance Ministry said the changes were expected to result in better utilisation of the scheme and facilitate increased credit flow to the MFI sector.
Sources: The Hindu Business Line Banking