The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the continuation of the Credit Guarantee Fund for Micro Units (CGFMU) for five years until March 31, 2031, to strengthen credit access for micro enterprises.
The scheme provides credit guarantee coverage to lending institutions through the National Credit Guarantee Trustee Company Limited (NCGTC) against default risks.
Since the launch of the Pradhan Mantri Mudra Yojana (PMMY), more than 60.36 crore loans amounting to Rs. 43.34 lakh crore had been sanctioned by lending institutions as of September 2026.
Under the scheme, guarantee coverage will be extended to:
- PMMY loans of up to Rs. 20 lakh to eligible micro enterprises.
- Overdraft facilities of up to Rs. 10,000 under Pradhan Mantri Jan Dhan Yojana (PMJDY).
- Loans to Self-Help Groups (SHGs) with portfolios ranging from Rs. 10 lakh to Rs. 20 lakh.
The Cabinet has also approved a reduction in the guarantee fee from 1% to 0.75% per annum, while the existing fee structure for SHGs will remain unchanged.
The scheme will cover eligible PMMY loans sanctioned during FY27 to FY31 and is expected to facilitate loans worth Rs. 12.6 lakh crore over the next five years.
The extension aims to strengthen collateral-free lending, encourage entrepreneurship and improve access to formal credit for micro enterprises.