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Government introduces Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0)
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....overnment introduces Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0)<BR>FEMA & RBI<BR>Dated:- 23-3-2026<BR><BR>Scheme aims to provide credit guarantee support through NCGTC to strengthen lending to MFIs, Facilitates increased credit flow of up to Rs.20,000 crore to the NBFC- MFIs Approximately 36 lakh MFI borrowers estimated to benefit from the scheme The Government of....
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.... India has introduced Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0). The scheme aims 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 borro....
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....wers. Salient features of the scheme: • Eligible borrowers: Existing or new small borrowers within the regulatory definition of micro finance as prescribed by RBI from time to time. • Guarantee coverage: 80% of amount in default for small, 75% for medium and 70% for large NBFC-MFIs/ MFIs. • Guarantee Fee: 0.50% p.a., on sanctioned amount (1st year) & ....
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....outstanding amount (thereafter). • Interest Rate: Capped at EBLR or MCLR + 2% p.a., on loans by MLIs to NBFC-MFIs or MFIs. While on-lending to small borrowers, these lenders shall cap the interest rate at 1% below the average rate of lending in past 6 months. • Valid till 30.06.2026 or loans till Rs. 20,000 crores are guaranteed, whichever is earlier. Impact: The sc....
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....heme will facilitate increased credit flow to the MFI sector. It is estimated that the scheme will facilitate on-lending by NBFC-MFIs/ MFIs to approximately 36 lakh small borrowers. Background: Microfinance plays a key role in Financial Inclusion by delivering credit to people at the bottom of the economic pyramid. NBFC-MFIs and MFIs are the key participants in the microfinance lending busin....
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....ess. In view of ongoing financial stress in the microfinance sector, there has been a slowdown in lending by banks to MFIs due to which smaller MFIs are struggling to get loans. The scheme aims to encourage lending institutions to provide funding to NBFC-MFIs or MFIs for on lending to small borrowers within the regulatory definition of micro finance as prescribed by the Reserve Bank of India. =....
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....============<BR> News - Press release - PIB....