Credit Guarantee Scheme for Microfinance Institutions 2.0 introduced to facilitate credit flow.

Key facts

• The Government of India launched Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) on 21 March 2026.
• The scheme provides guarantee cover through National Credit Guarantee Trustee Company Limited (NCGTC) to Banks and Financial Institutions against losses on loans to NBFC-MFIs and MFIs.
• Guarantee coverage is 80% for small, 75% for medium and 70% for large NBFC-MFIs/MFIs.
• Guarantee fee is 0.50% per annum on sanctioned amount in first year and on outstanding amount thereafter.
• Interest rate cap is EBLR or MCLR + 2% per annum on loans by MLIs to NBFC-MFIs or MFIs.
• On-lending to small borrowers must be at 1% below the average lending rate of the past 6 months.
• The scheme is valid till 30 June 2026 or until Rs 20,000 crore of loans are guaranteed, whichever is earlier.
• Approximately 36 lakh MFI borrowers are expected to benefit from the scheme.