CREDIT GUARANTEE SCHEME FOR MICROFINANCE INSTITUTIONS- 2.0 (CGSMFI-2.0)

NEWS: Government of India has launched CGSMFI-2.0 with Rs 20000 crore corpus.

About CGSMFI-2.0

• To provide guarantee coverage to eligible Member Lending Institutions (MLIs) for financing Non-Banking Financial Company MFI (NBFC-MFI) and MFIs for on-lending to existing or new small borrowers.
• NBFC-MFI are non-deposit taking NBFC with minimum 75% of its total assets deployed towards “microfinance loans” (collateral-free loan a household with annual household income up to ₹3,00,000).
• Managed and operated by: National Credit Guarantee Trustee Company (NCGTC), wholly owned by Department of Financial Services, Ministry of Finance
• Tenure: June 2026 or till guarantees of Rs 20,000 crore are issued

About Microfinance

• Refers to the provision of small-scale financial services, including loans, savings, and insurance, to individuals and small businesses that lack access to traditional banking services.
• Significance of Microfinance in India:
  • Financial inclusion and Poverty Alleviation
  • Supports MSMEs and entrepreneurship
  • Women borrowers constitute 95% in microfinance sector. (Economic Survey 2025-26).