Credit Guarantee Scheme for Microfinance Institutions -2.0 (CGSMFI-2.0) Guidelines PDF
The Government of India, through the Department of Financial Services, Ministry of Finance, has introduced Credit Guarantee Scheme for Microfinance Institutions- 2.0 (CGSMFI-2.0) to provide guarantee coverage to eligible Member Lending Institutions (MLIs) for financial assistance extended by them to Non-Banking Financial Company-Microfinance Institutions (NBFC-MFI) and MFIs for on-lending to eligible small borrowers within the regulatory definition of micro finance as prescribed by RBI from time to time.
Date of CGSMFI-2.0 Scheme and Amount
The scheme shall come into force from 20.03.2026 and is applicable to all loans sanctioned by the MLIs to NBFCMFIs/MFIs upto 30.06.2026 or till guarantee for an amount of Rs 20,000 crore are issued, whichever is earlier.
Classification of NBFC-MFIs/MFIs
“NBFC-MFIs/MFIs” shall be classified as Small Size, Medium Size and Large Size based on AUM as per details below:
| Type | AUM |
|---|---|
| Small Size | Less than Rs. 500 crore |
| Medium Size | Rs. 500 crore to less than Rs. 2000 crore |
| Large Size | Rs. 2000 crore or more |
Interest Rate and Tenure of Loan as per CGSMFI-2.0
The interest rate on the loans sanctioned by MLIs to NBFC-MFIs/MFIs is capped at External Benchmark Lending Rate (EBLR) or 1 Year MCLR + 2% per annum. Further, MLIs shall ensure that the interest rate on loans by NBFC- MFIs/MFIs to small borrowers is capped at 1% below the average rate of their lending in past 6 months.
Such funding can be one time or in tranches, based on assessment by the MLI. Entire disbursement should be ensured by the MLI to the MFI/NBFCMFI within 3 months of the sanction.
Maximum tenure of loan will be 3 years (1-year moratorium plus 2 years for loan repayment). MLIs to ensure that at least 5% of their total loan amount under the scheme are sanctioned to Small size NBFC-MFIs/MFIs & 10% to Medium size NBFC-MFIs/MFIs. The maximum amount of loan which can be sanctioned by MLIs to NBFC- MFIs/MFIs shall be capped at 20% of the Assets Under Management (AUM) of respective NBFC-MFI/MFI subject to maximum of ₹100 crore to Small size, ₹200 crore to Medium size and ₹300 crore to large size NBFC-MFIs/MFIs.
The repayment period of the loan shall be for a maximum period of 3 years (1 year moratorium plus 2 years for loan repayment).
The funding provided by the MLIs shall be guaranteed by NCGTC to the extent of guarantee cover at 70% to Large NBFC-MFIs/MFIs, 75% to Medium NBFC-MFIs/MFIs & 80% to Small NBFC-MFIs/MFIs of the amount in default for a maximum period of 3 years.
The funding so provided by the MLIs to the NBFC-MFIs/MFIs shall be utilized for on-lending to eligible small borrowers.
Monitoring of MFIs and NBFC-MFIs by Banks
MLIs should monitor MFIs/NBFC-MFIs supported under the Scheme and ensure that:
- (i) The financial assistance is utilized for creation of fresh loan assets. These assets should be created within a period of 3 months from the date of disbursement of each tranche of loans;
- (ii) The funds are utilized as per the objective and there is no diversion of funds;
- (iii) Interest rate charged by the NBFC-MFIs/MFIs on these loans is at least 1% below the average rate of their lending in past 6 months;
- (iv) Loan from the NBFC-MFIs/MFIs to the ultimate borrower to be within the regulatory definition of micro finance as prescribed by RBI from time to time.
- (v) A separate account is opened for credit facility extended to the eligible small borrowers under the Scheme;
- (vi) Financial assistance extended to the borrowers is as per extant guidelines of RBI;
- (vii) Statutory Auditor certificate is obtained from the respective MFI/NBFC-MFI confirming compliance with the above within 6 months from the date of disbursement of each tranche of loan by the MLI
MLI shall obtain Bureau (any of the four Credit Bureaus) report of the incremental lending covered under the scheme for compliance on a quarterly basis and make it available to NCGTC.
MLI shall ensure to obtain Statutory Auditor certificate from respective NBFC- MFI/MFI and submit a Management Certificate signed by a duly authorized person certifying compliance with the guidelines of the scheme. If required, NCGTC may also call for Statutory Auditor certificate from the MLI regarding compliance with the scheme guidelines.
NPA and NCGTC Guarantee Fee
Upon NBFC-MFIs/MFIs getting classified as NPA in the books of an MLI, the respective MLI shall submit claim on an annual basis (once every year) in respect of amount in default.
MLIs shall pay to NCGTC Guarantee Fee at 0.5% of the sanction amount (first year) and outstanding amount (thereafter).
Download Credit Guarantee Scheme for Microfinance Institutions -2.0 (CGSMFI-2.0) Guidelines PDF
