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Cabinet approves continuation of Credit Guarantee Fund for Micro Units

PIB National (English) · Published 11 November 2026 · Last updated

The Union Cabinet has approved the continuation of the Credit Guarantee Fund for Micro Units and the Stand-Up India Scheme, extending crucial financial support and credit guarantees for micro-enterprises and marginalized entrepreneurs.

Key points

  • The Union Cabinet chaired by the Prime Minister approved the continuation of the Credit Guarantee Fund for Micro Units for a five-year period up to 31.03.2031.
  • The scheme provides credit guarantee coverage to Lending Institutions through the National Credit Guarantee Trustee Company Limited against default risk.
  • As on September 2026, more than 60.36 crore loans amounting to Rs.43.34 lakhs crore have been sanctioned under the Pradhan Manta Mudra Scheme since its launch.
  • The Credit Guarantee Fund for Micro Units was originally launched in January 2016 to act as a catalyst for Pradhan Mantri Mudra Yojana loans.
  • The scheme covers loans extended to eligible micro enterprises under Pradhan Mantri Mudra Yojana up to Rs.20 lakh.
  • It covers overdraft facilities of up to Rs.10,000 provided by banks under Pradhan Mantri Jan Dhan Yojana accounts.
  • The scheme covers loans granted to Self Help Group portfolios ranging between Rs.10 lakh to Rs.20 lakh.
  • The guarantee fee has decreased from 1% per annum to 0.75% per annum, while Self Help Groups continue to pay 0.25% for the first year and 0.50% in subsequent years.
  • The scheme applies to all loans extended under Pradhan Mantri Mudra Yojana during the XVIth Finance Commission Cycle covering FY 2026-27 to FY 2030-31.
  • The extension of the scheme aims to enable loans worth Rs.12.6 lakh crore over the next five years.
  • The Cabinet also approved the continuation of the Stand-Up India Scheme on 11 November 2026 with a credit guarantee corpus of Rs.4,111 crore targeting a minimum of 2.5 lakh beneficiaries.

Background

  • The Credit Guarantee Fund for Micro Units was launched in January 2016 to support credit delivery to micro-enterprises.
  • The Pradhan Mantri Mudra Yojana has been operational since 2016, facilitating collateral-free formal institutional credit for millions of informal borrowers.

Prelims facts and Mains angle for this issue are in the full SWAदेSH note.

Original report: PIB National (English)

Sources