CGFMU extended till 31 March 2031 with ₹5,000 crore corpus, guarantee fee cut to 0.75%

Union Cabinet approved on 11 November 2026 continuing the Credit Guarantee Fund for Micro Units (CGFMU) for five years, till 31 March 2031, with a ₹5,000 crore corpus. It will back about ₹12.6 lakh crore of loans in that period.

Guarantee fee falls from 1% a year to 0.75% a year. For Self Help Group loans, the fee stays at 0.25% in the first year and 0.50% after that.

CGFMU gives lenders guarantee cover against default on loans up to ₹20 lakh under Pradhan Mantri Mudra Yojana (PMMY), overdrafts up to ₹10,000 in Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts, and loans to Self Help Groups with portfolios between ₹10 lakh and ₹20 lakh. NCGTC runs the fund.

For working capital limits, cover is linked to the amount disbursed. For term loans, it's linked to the outstanding amount. It applies to PMMY loans given from 2026-27 to 2030-31. Till September 2026, lenders had sanctioned over 60.36 crore PMMY loans worth ₹43.34 lakh crore.