In a move to ease liquidity pressure and revive lending, the government has introduced a ₹20,000 crore credit guarantee scheme for microfinance institutions (MFIs).
The initiative, called the Credit Guarantee Scheme for Microfinance Institutions – 2.0 (CGSMFI-2.0), is designed to restore credit flow to the sector and improve access to finance for nearly 50 lakh borrowers.
Effective from March 20, 2026, the scheme will cover loans sanctioned by Member Lending Institutions (MLIs) to NBFC-MFIs and MFIs. The coverage will remain valid until June 30, 2026, or until guarantees worth ₹20,000 crore are issued, whichever comes earlier.
The guarantees will be provided by the National Credit Guarantee Trustee Company (NCGTC), supporting loans that MFIs extend further to small borrowers. The structure aligns with Reserve Bank of India norms for microfinance lending.
The scheme aims to address ongoing funding challenges faced by MFIs, encourage banks to resume lending, and strengthen the overall microfinance ecosystem.
By improving liquidity and reducing risk for lenders, the initiative is expected to enhance credit availability for underserved segments and support financial inclusion.
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