The National Credit Guarantee Trustee Company (NCGTC) has significantly enhanced the Credit Guarantee Scheme for Microfinance Institutions 2.0 (CGSMFI 2.0) by raising the sanctioned amount for large microfinance institutions from ₹300 crore to ₹1,000 crore per institution. According to reports from Business Standard, this revision is subject to a ceiling of 20 per cent of the institution's Assets Under Management (AUM). The scheme, which came into force on March 20, 2026, is scheduled to run until June 30, 2026, or until guarantees for ₹20,000 crore are issued by NCGTC — whichever is earlier.
As reported by Business Standard, disbursements under the scheme are yet to begin as microlenders had flagged that the ₹300 crore cap for large institutions was inadequate. Sources familiar with the development indicated that disbursements had not been initiated so far and were expected to begin now after the revision in the limit for large borrowers. However, lenders have sought an extension of the June-end deadline due to the delayed implementation.
According to Business Standard, bank funding to microfinance institutions has declined by nearly 70 per cent between the October-December quarter of FY24 and the same quarter of FY26. The scheme is specifically aimed at restoring lender confidence and improving credit flow, particularly to small and medium MFIs. The guarantee cover is provided to commercial banks and all-India financial institutions for loans extended to non-banking financial company microfinance institutions (NBFC-MFIs) and other MFIs, for on-lending to existing or new small borrowers.
As reported by Business Standard, there are concerns that smaller MFIs — those with AUM of less than ₹500 crore — may still not be able to access their full share of the guarantee. The scheme requires banks and other institutions to ensure that at least 5 per cent of their total loan amount under the scheme is sanctioned to small MFIs, and 10 per cent to medium-sized ones. Microlenders have also requested that AUM calculations for smaller institutions include off-balance-sheet items, so they can benefit fully from the scheme.
