The government extends the microcredit guarantee program for five years

Information and Broadcasting Minister Ashwini Vaishnaw. File | Photo credit: Sushil Kumar Verma

The Union Cabinet on Wednesday (Nov 11, 2026) approved the continuation of the Credit Guarantee Fund for Micro Units (CGFMU) for five years till March 2031, a move that will facilitate loans of ₹12.6 crore.

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

Launched in January 2016, the CGFMU has acted as a major catalyst to enable PMMY credit growth in the country.

Briefing the decisions taken at the cabinet meeting, Information and Broadcasting Minister Ashwini Vaishnaw said the Micro Unit Credit Guarantee Fund provides credit guarantee cover to credit institutions – mitigating the risk of default – through the National Credit Guarantee Trustee Company Limited (NCGTC).

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday (November 11) approved a corpus of ₹5,000 crore to facilitate ₹12.6 crore PMMY loans, an official release said.

The report said that unsecured loans under the Pradhan Mantri Mudra Yojana have created a whole new generation of entrepreneurs who were previously unable to avail loans from the formal banking system.

“The extension of the CGFMU scheme will enable loans of ₹ 12.6 crore over the next five years,” the company said, adding that the scheme will act as a catalyst for young, budding entrepreneurs to start and grow businesses.

The scheme will apply to all loans made under PMMY during the XVI Finance Commission cycle (2026-27 to 2030-31).

The fund provides credit institutions with guarantees for specific credit lines. It covers PMMY loans up to ₹20,000, Pradhan Mantri Jan Dhan Yojana overdrafts up to ₹10,000 and Self Help Group portfolio loans between ₹10,000 and ₹20,000,000.

Published – 11 Nov 2026 22:32 IST