The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the extension of the Credit Guarantee Fund for Micro Units (CGFMU) for another five years, until March 31, 2031. The scheme has been approved with a corpus of ₹5,000 crore and is expected to facilitate ₹12.6 lakh crore in loans under the Pradhan Mantri Mudra Yojana (PMMY) over the next five years.
Launched in January 2016, the CGFMU provides credit guarantee coverage to lending institutions through the National Credit Guarantee Trustee Company Ltd. (NCGTC), protecting them against the risk of loan defaults.
According to the government, more than 60.36 crore loans, amounting to ₹43.34 lakh crore had been sanctioned under the PMMY by September 2026. This scheme includes eligible Mudra loans of up to ₹20 lakh, overdrafts of up to ₹10,000 under Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts, and Self-Help Group (SHG) loans ranging from ₹10 lakh to ₹20 lakh.
Under the revised provisions, the annual guarantee fee for eligible loans will be reduced from 1% to 0.75%, while the fee structure for Self-Help Group (SHG) loans remain unchanged at 0.25% for the first year and 0.50% for subsequent years. The guarantee coverage will be linked to the amount disbursed for working capital facilities and the outstanding amount for term loans.
The extended scheme will cover PMMY loans sanctioned during the 2026-27 to 2030-31 financial years, corresponding to the XVIth Finance Commission period. With an approved corpus of ₹5,000 crore and an expected loan facilitation of ₹12.6 lakh crore over the next five years, the scheme is aimed at boosting grassroots entrepreneurship, promoting self-employment and supporting the growth of small businesses across the country.
(PIB)
