New Delhi [India], June 10 (ANI): The Government of India has extended the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) till August 2026 and raised the maximum loan limit for large NBFC-MFIs/MFIs under the scheme, as per a statement by the Ministry of Finance on Wednesday.

According to the release, the Centre has extended the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) until August 31, 2026, or until guarantees worth Rs 20,000 crore are issued, whichever comes first.

'The Government of India has approved extension in validity of the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) upto 31.8.2026 or till guarantees for an amount of 20,000 crore are issued, whichever is earlier,' the release said.

According to the release, the government has also increased the maximum loan limit for large NBFC-MFIs/MFIs under the scheme from Rs 300 crore to Rs 1,000 crore, subject to an overall cap of 20 per cent of their Assets Under Management (AUM).

'The Government of India has also approved an increase in the maximum loan amount capped to Large Sized NBFC-MFIs/MFIs from 300 crores to 1000 crores under the overall ceiling of 20% of Assets under Management (AUM),' the release added.

As per the release, the extension in validity and increase in maximum loan amount capped to Large Sized NBFC-MFIs/MFIs will likely lead to better utilisation of the scheme and facilitate increased credit flow to the MFI sector.

The Central Government launched the CGSMFI-2.0 scheme on March 20, 2026, to provide credit guarantees to banks and financial institutions for loans given to microfinance institutions, which in turn lend to small borrowers. So far, loans worth Rs 770 crore have been sanctioned under the scheme, as per the release.

The scheme provides a guarantee cover of 80 per cent on defaulted amounts for small MFIs/NBFC-MFIs, 75 per cent for medium-sized entities, and 70 per cent for large institutions.

A guarantee fee of 0.5 per cent per annum is charged on the sanctioned amount in the first year and on the outstanding amount thereafter. Furthermore, the interest rates on loans extended by member lending institutions to MFIs/NBFC-MFIs are capped at EBLR or MCLR plus 2 per cent per annum, while these institutions are required to lend to small borrowers at rates at least 1 percentage point below their average lending rate over the previous six months. (ANI)