NEW DELHI: The Cabinet on Wednesday approved the continuation of the Rs 5,000-crore credit guarantee fund for micro units (CGFMU), facilitating Rs 12.6 lakh crore in Mudra loans, and extended the Stand-Up India Scheme until March 31, 2031, targeting 250,000 additional women and SC/ST entrepreneurs.
Launched in January 2016, the CGFMU scheme provides credit guarantee cover to lending institutions through the National Credit Guarantee Trustee Company (NCGTC) against the risk of loan defaults, supporting collateral-free lending under the Pradhan Mantri Mudra Yojana (PMMY).
As of September 2026, more than 603.6 million loans amounting to Rs 43.34 lakh crore had been sanctioned under PMMY since its launch, with CGFMU playing a key role in expanding access to institutional credit for micro enterprises.
Under the scheme, guarantee coverage is available for eligible PMMY loans of up to Rs 20 lakh, overdrafts of up to Rs 10,000 under Pradhan Mantri Jan Dhan Yojana accounts, and loans to self-help groups with portfolios between Rs 10 lakh and Rs 20 lakh.
The Cabinet has also approved a reduction in the annual guarantee fee for PMMY loans from 1% to 0.75%. The existing fee structure for self-help groups will remain unchanged.
The extension, covering loans sanctioned between FY27 and FY31, is expected to encourage aspiring entrepreneurs, particularly those previously excluded from formal banking, to establish and expand their businesses, the government said.
Besides extending the Stand-Up India Scheme for five years, the Cabinet also approved a credit guarantee corpus of Rs 4,111 crore to support the scheme. Launched in April 2016, it has facilitated loans to more than 275,000 women and SC/ST entrepreneurs.
Under the scheme, eligible borrowers can avail composite or term loans ranging from above Rs 10 lakh to Rs 1 crore for setting up greenfield enterprises in manufacturing, services, trading and agriculture-allied activities. Loans can cover up to 85% of the project cost, with credit guarantee coverage of 85% of the loan amount and a standard guarantee fee of 0.50%.
The extension aims to improve access to institutional credit for underserved communities, encourage enterprise creation and promote inclusive economic growth.
Source: The Financial Express
