Berliner Tageblatt - India extends micro-credit guarantee plan for five years

"NEW DELHI: The Union Cabinet on Wednesday approved the continuation of the Credit Guarantee Fund for Micro Units (CGFMU) for five years up to March 2031, a move that will facilitate loans of Rs 12.6 lakh crore. As of September 2026, more than 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, launched in January 2016, has acted as a major catalyst in enabling the growth of PMMY loans in the country. The Union Cabinet, chaired by Prime Minister Narendra Modi on Wednesday, gave its nod to a corpus of Rs 5,000 crore facilitating PMMY loans amounting to Rs 12.6 lakh crore, an official release said. In a briefing on the decisions taken at the Cabinet meeting, Information and Broadcasting Minister Ashwini Vaishnaw said that the Credit Guarantee Fund for Micro Units provides credit guarantee coverage to lending institutions through National Credit Guarantee Trustee Company Limited (NCGTC) against default risk. The release said collateral-free loans under Pradhan Mantri Mudra Yojana have created a whole new generation of entrepreneurs who previously could not avail loans from the formal banking system." The extension of the CGFMU scheme will enable loans of Rs.12.6 lakh crore over the next five years,' it said, and added that the scheme will act as a catalyst for young aspiring entrepreneurs to set up and grow their business. The Scheme will be applicable to all loans extended under PMMY during the XVIth Finance Commission Cycle (2026-27 to 2030-31). The fund provides guarantees to lending institutions for specified credit facilities. It covers PMMY loans up to Rs 20 lakh, overdrafts on Pradhan Mantri Jan Dhan Yojana accounts up to Rs 10,000, and Self Help Group portfolio loans between Rs 10 lakh and Rs 20 lakh.

H.Seidel--BTB