The Union Cabinet, led by Prime Minister Narendra Modi, has extended the Credit Guarantee Fund for Micro Units (CGFMU) until March 2031. Since its launch in January 2016, the fund has played a significant role in boosting loans under the Pradhan Mantri Mudra Yojana (PMMY).
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 provides credit guarantee coverage to lending institutions against default risk through the National Credit Guarantee Trustee Company Limited (NCGTC).
As of September 2026, over 60.36 crore loans amounting to Rs.43.34 lakh crore have been sanctioned by lending institutions since the launch of the PM Mudra Scheme. The CGFMU, which was launched in January 2016, has acted as a major catalyst in enabling the growth of PMMY loans in the country.
The CGFMU will provide guarantee to Lending Institutions (LIs) for various credit facilities, including loans extended to eligible micro enterprises under PMMY up to Rs.20 lakh, overdrafts of up to Rs.10,000 provided by banks under Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts, and loans granted to Self Help Groups (SHG) where the portfolio is between Rs.10 lakh and Rs.20 lakh.
Guarantee coverage will be linked to the disbursement amount in case of working capital limits and the outstanding amount for term loan accounts, reflecting the actual risk exposure of LIs. The guarantee fee will decrease from 1% p.a. to 0.75% p.a., with no change for SHGs; they will continue to pay a guarantee fee of 0.25% for the first year and 0.50% in subsequent years.
The Scheme will be applicable to all loans extended under PMMY during the XVIth Finance Commission Cycle, i.e., from FY 2026-27 to FY 2030-31.
Source:
Press Information Bureau
