Govt extends Credit Guarantee Fund for Micro Units for 5 years

• The Union Cabinet approved the continuation of the Credit Guarantee Fund for Micro Units (CGFMU) for a period of five years up to March 31, 2031. 

• The scheme provides credit guarantee coverage to the lending institutions through National Credit Guarantee Trustee Company Limited (NCGTC) against default risk.

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

• CGFMU which was launched in January 2016 has acted as a major catalyst in enabling the growth of PMMY loans in the country.

• The extension of CGFMU scheme will enable loans of Rs 12.6 lakh crore over next five years.

• The scheme will act as a catalyst to young aspiring entrepreneurs to set up and grow their business.

Features of the scheme:

• Loans extended to eligible micro enterprises under PMMY up to Rs 20 lakh.

• Overdraft of up to Rs 10,000 provided by banks under Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts.

• Loans granted to Self Help Group (SHG) where portfolio is between Rs 10 lakh to Rs 20 lakh.

• The scheme would be applicable to all loans extended under PMMY during the XVIth Finance Commission cycle — FY 2026-27 to FY 2030-31.