Government Extends CGSMFI-2.0 Till August 2026, Raises Loan Limit for Large MFIs

To strengthen the India’s financial inclusion the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) got extension until 31st August, 2026 and it is approved by the Government of India. Also the government has also increased the maximum loan amount available to the large NBFC-MFIs and MFIs from ₹300 crore to ₹1,000 crore. This decision is expected to improve the credit availability for small borrowers and will enhance lending activities across the microfinance ecosystem.

What Changes Have Been Made to CGSMFI-2.0?

The government has introduced the two major changes to the scheme,

• Extension of the CGSMFI-2.0 (Credit Guarantee Scheme for Microfinance Institutions-2.0 ) validity till 31st August, 2026.
• Increase in the maximum loan amount for the large NBFC-MFIs/MFIs from ₹300 crore to ₹1,000 crore it is subject to the overall ceiling of 20% of Assets Under Management (AUM).

These measures are intended to improve the utilization of the scheme and also encourage greater lending to underserved sections of society.

How Does CGSMFI-2.0 Support the Microfinance Sector?

It was launched on March 20, 2026 and CGSMFI-2.0 provides credit guarantee support to the banks and financial institutions via the National Credit Guarantee Trustee Company Limited (NCGTC).

The scheme covers the expected losses on loans which are extended to NBFC-MFIs and MFIs which in turn lend to small borrowers.

By reducing lending risks, this scheme encourages the financial institutions to provide more credit to the microfinance sector.

So far, ₹770 crore worth of loans have been sanctioned under the scheme.

Why Is the Extension Important?

Microfinance institutions plays the crucial role in providing financial services to low-income households, women entrepreneurs and small businesses that often lack access to the formal banking.

The extension of CGSMFI-2.0 is expected to,

• Improve the credit flow to the microfinance sector.
• Will support the financial inclusion initiatives.
• Strengthen lending confidence among multiple banks and financial institutions.
• Expand the access to affordable credit for small borrowers.
• Also help to achieve the scheme’s target of facilitating up to ₹20,000 crore in credit.

Key Features of CGSMFI-2.0

• CGSMFI 2.0 scheme was launched on 20th March, 2026. It is designed to improve the access to credit for the small borrowers across the country.
• The guarantee is provided via the National Credit Guarantee Trustee Company Limited (NCGTC).
• Since the implementation of the scheme so far ₹770 crore have already been sanctioned.

Guarantee Coverage

• The government will cover up to 80% of the default losses for small the NBFC-MFIs and MFIs.
• For the medium-sized institutions the guarantee cover provided to around 75%.
• Also the large institutions can receive the guarantee cover up to 70%.
• Also the annual guarantee fee has been fixed at to 0.50%.