Cabinet Approves Continuation of Stand-Up India Scheme for Five Years

Union Cabinet headed by Prime Minister Narendra Modi has approved the continuation of Credit Guarantee Fund for Micro Units (CGFMU) for a period of 5 years till 31st March 2031 with a corpus of Rs. 5000 crore. This scheme will enable sanctioning of Rs. 12.6 lakh crore in loans over the next 5 years. This scheme offers guarantee to lending institutions for eligible loans.

What is Credit Guarantee Fund for Micro Units?

The Credit Guarantee Fund for Micro Units (CGFMU) was introduced in January 2016 to promote lending for micro enterprises. It offers guarantees to eligible lending institutions.

It is operated by the National Credit Guarantee Trustee Company Limited (NCGTC). This offers lending institutions more confidence to provide loans, including unsecured loans, to eligible borrowers.

Key Highlights

Scheme Name: Credit Guarantee Fund for Micro Units (CGFMU)
Launched: January 2016
Period Approved: 5 years
Valid Until: 31st March 2031
Corpus Approved: Rs. 5,000 crore
Expected Loan Facilitation: Rs. 12.6 lakh crore over 5 years
Trustee: National Credit Guarantee Trustee Company Limited (NCGTC)
Applicable for: FY 2026-27 to FY 2030-31
Finance Commission: 16th Finance Commission

Benefits Provided

Guarantee for the following credit facilities,

Loans under PMMY – Loans up to Rs. 20 Lakh to eligible micro-enterprises under Pradhan Mantri Mudra Yojana.
Overdraft under PMJDY – Overdraft facility up to Rs. 10,000 under Pradhan Mantri Jan-Dhan Yojana by banks.
Loans to Self Help Groups – Loans to SHGs with a portfolio between Rs. 10 Lakh to Rs. 20 Lakh.

Calculation of Guarantee

Guarantee is based on the actual exposure of lending institutions.

Working Capital Limits – Based on amount disbursed.
Term Loans – Based on outstanding loan amount.
This ensures that the guarantee is based on the exposure of the lending institution.

Reduction in Guarantee Charges

The annual guarantee charges have been reduced for the applicable loans. However, there has been no changes in the charges for SHG loans.

Type of Loans	Previous Charge	New Charge
Non-SHG Loans	1% per annum	0.75% per annum
SHG Loans (Year 1)	0.25%	Nil
SHG Loans (Year 2+)	0.50%	Nil

This provides lending institutions with lower guarantee charges.

Performance of Pradhan Mantri Mudra Yojana

As of September 2026, over 60.36 crore loans have been sanctioned by lending institutions worth Rs. 43.34 lakh crore since the introduction of PMMY.

Continuation of CGFMU will enable an additional Rs. 12.6 lakh crore in PMMY loans to be sanctioned between FY 2026-27 to FY 2030-31.

Static Facts About Scheme

Pradhan Mantri Mudra Yojana (PMMY):
Introduced on 8th April 2015.
Aims to provide institutional credit to micro and small business units.
MUDRA – Micro Units Development and Refinance Agency Ltd.
Provides unsecured loans via eligible lending institutions.
Shishu, Kishor, Tarun & Tarun Plus.

Impact of Scheme

The continuation of CGFMU will help increase the availability of formal credit to micro enterprises. As it provides guarantee to lending institutions, they are more likely to provide loans to borrowers.
This will help new entrepreneurs, self-employment and growing small businesses. The reduction in guarantee charges may also provide an incentive to lend.