Government extends micro credit guarantee scheme for five years

Information and Broadcasting Minister Ashwini Vaishnaw. File | Photo Credit: Sushil Kumar Verma

The Union Cabinet on Wednesday (November 11, 2026) approved the continuation of the Credit Guarantee Fund for Micro Units (CGFMU) for five years up to March 2031, a move that will facilitate loans of ₹12.6 lakh crore.

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As of September 2026, more than 60.36 crore loans amounting to ₹43.34 lakh crore have been sanctioned by lending institutions since the launch of the Pradhan Mantri Mudra Yojana (PMMY).

The CGFMU, launched in January 2016, has acted as a major catalyst in enabling the growth of PMMY loans in the country.

In a briefing on the decisions taken at the Cabinet meeting, Information and Broadcasting Minister Ashwini Vaishnaw said that the Credit Guarantee Fund for Micro Units provides credit guarantee coverage to lending institutions — mitigating the risk of default —through the National Credit Guarantee Trustee Company Limited (NCGTC).

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday (November 11) gave its nod to a corpus of ₹5,000 crore facilitating PMMY loans amounting to ₹12.6 lakh crore, an official release said.

The release said collateral-free loans under the Pradhan Mantri Mudra Yojana have created a whole new generation of entrepreneurs who previously could not avail loans from the formal banking system.

"The extension of the CGFMU scheme will enable loans of ₹12.6 lakh crore over the next five years," it said, adding that the scheme will act as a catalyst for young, aspiring entrepreneurs to set up and grow businesses.

The scheme will be applicable to all loans extended under the PMMY during the XVIth Finance Commission Cycle (2026-27 to 2030-31).

The fund provides guarantees to lending institutions for specified credit facilities. It covers PMMY loans up to ₹20 lakh, overdrafts on Pradhan Mantri Jan Dhan Yojana accounts up to ₹10,000, and Self Help Group portfolio loans between ₹10 lakh and ₹20 lakh.

Published - November 11, 2026 10:32 pm IST