The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the continuation of the Credit Guarantee Fund for Micro Units (CGFMU) until March 2031. The fund, launched in January 2016, has played a significant role in enabling growth of loans under the Pradhan Mantri Mudra Yojana.
The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the continuation of the Credit Guarantee Fund for Micro Units (CGFMU) for a period of five years up to 31st March 2031. This decision was announced on 11th November 2026 by the Press Information Bureau. The CGFMU, which was launched in January 2016, provides credit guarantee coverage to Lending Institutions through National Credit Guarantee Trustee Company Limited (NCGTC) against default risk. As of September 2026, more than 60.36 crore loans amounting to Rs.43.34 lakhs crore have been sanctioned by lending institutions since the launch of the Pradhan Mantri Mudra Scheme. The scheme has acted as a major catalyst in enabling the growth of PMMY loans in the country.
Salient features of the Scheme include providing guarantee to Lending Institutions (LIs) for loans extended to eligible micro enterprises under Pradhan Mantri Mudra Yojana (PMMY) up to Rs.20 lakh, overdraft of up to Rs.10,000 provided by banks under Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts, and loans granted to Self Help Group (SHG) where portfolio is between Rs.10 lakh to Rs.20 lakh. The guarantee coverage is linked to the disbursement amount in case of working capital limits and outstanding amount for term loan accounts to reflect the actual risk exposure of LIs. The guarantee fee has been decreased from @1% p.a. to @ 0.75% p.a., with no change for SHG, who will continue to pay a guarantee fee of 0.25% for the first year and 0.50% in subsequent years. The Scheme would be applicable to all loans extended under PMMY during the XVIth Finance Commission Cycle i.e. FY 2026-27 to FY 2030-31.
Source:
Press Information Bureau
