Cabinet Extends Credit Guarantee Fund For Micro Units By Five Years Till March 2031

The Union Cabinet on Wednesday approved a five-year extension of the Credit Guarantee Fund for Micro Units (CGFMU) until March 2031, providing continued support to lending institutions financing micro enterprises under the Pradhan Mantri Mudra Yojana (PMMY).

The decision was taken at a Cabinet meeting chaired by Prime Minister Narendra Modi. Information and Broadcasting Minister Ashwini Vaishnaw announced the extension while briefing the media on the Cabinet's decisions.

According to an official release, the Cabinet also approved a Rs 5,000-crore corpus to facilitate PMMY loans amounting to Rs 12.6 lakh crore.

The credit guarantee mechanism is designed to protect lending institutions against the risk of defaults on loans extended to micro units. The guarantee coverage is provided through the National Credit Guarantee Trustee Company Limited (NCGTC).

The extension is expected to help sustain the flow of institutional credit to small businesses and entrepreneurs by providing lenders with continued risk protection.

Data released by the government showed that, as of September 2026, lending institutions had sanctioned more than 60.36 crore loans amounting to Rs 43.34 lakh crore since the launch of the PM Mudra Scheme.

Launched in January 2016, the CGFMU has emerged as a key mechanism supporting the expansion of Mudra lending across the country, the official release said.

The Pradhan Mantri Mudra Yojana aims to improve access to institutional finance for micro and small business enterprises, particularly those that may face difficulties in obtaining conventional bank loans.

The continuation of the guarantee fund is expected to strengthen lenders' confidence and facilitate further credit flow to the micro-enterprise sector, which plays an important role in employment generation and economic activity.